The proposal for cities to cooperate regionally is practically challenging, as different cities tend to have different fiscal priorities. The fiscal freedom exercised by the cities gives them the edge over the other cities, thus creating a competitive environment for economic and social growth. The proposal for a regional front will decelerate growth. It will have a far-reaching effect on the fiscal health of the cities.
The new LED growth processes are pillars for economic development. The idea will not be as viable as it is anticipated to be, since the regional harmony has proven to be unsuccessful, as witnessed with the federal government, which represents a regional front towards economic and social growth. The practical aspect of fiscal regional frontier has been closely evident at the federal level and therefore suggests that the fiscal regional approach will not be that effective as it thought to be, as different cities have different budgeting priorities and economic blueprints.
The entrepreneurial cities employ the Fordist model of economic growth, which is solely responsible for the tremendous growth, since cities are able to exercise key decisions and fiscal policies, which create an enabling environment that attract investors to open their ventures. The Fordist model encourages mass production of products, thus creating revenue from the sales tax, as workers are paid relatively handsome wages which drives consumption unlike the proposed fiscal regional front, which will undermine the progress made by the entrepreneurial city.
The proposal of regional fiscal approach other than the fiscal autonomy of entrepreneurial city will hurt the localized economy, since it will see significant reduction in private investments as a result of interdependence between cities. This has an effect on Tax Increment Financing, which is crucial for investment. The interdependence between cities can be interpreted by private investor as strength possessed by cities joining forces, thus the cities will see stunted growth. The competition provides a room for rapid growth as cities try to outdo each other in terms of infrastructure and social amenities.
The proposal for cooperation by cities to have a fiscal regional front will affect the homogeneity of the local economy. Most cities understand their local economy and can identify key areas that need to be funded, and thus it gives cities that impetus as they are able to solve or undertake opportunities which are localized and therefore they can develop tailor-made fiscal and budgeting solutions. This, compared to the regional fiscal approach, will be a complex process, as reaching harmony to have a cohesive fiscal and budget plan will tend to affect growth of the entrepreneurial cities, since each city has its unique areas of opportunities, constraints, and fiscal approaches.
Tiebout argue that cities spend far too much of their resources on various areas, such as the police, infrastructure, city labor forces, services, and public schools; yet these items are fundamental for investors. An investor would not place his/her money in a city without robust and sound economic and social systems in place. Investors are attracted to the cities’ economic zones and this is one area that is responsible for the rapid growth of the cities. On the other hand, cities which have invested heavily in such economic and social blueprint will recoup back their investments through revenue i.e. sales tax and can easily secure financing through private investments, which, compared to the regional front, will be a tedious and complex process and therefore it tends to affect their fiscal health. Entrepreneurial cities tend to experience endogenous growth as result of the new LED model.
The rise of entrepreneurial cities has been directly attributed to economic constraints and federal withdrawal. The proposal of cooperation by cities to form a regional front will be paradoxical itself, as the federal government had clearly represented this and still there were no sound economic and social solutions which would fiscally take into account the endogenous nature of each city. The entrepreneurial cities are the new economic zones, as global competition is geared towards those regions where favorable business environment have been fully developed. Most global investors have their eyes on the homogeneity nature of the entrepreneurial cities; a good example was Detroit, Michigan, which established itself as a motor hub, and multinational banks in New York established this city as a financial hub. The investors are always keen on cities with established economic specialization and endogenous nature of their economy, as opposed to the regional front where the entrepreneurial cities have come together.
There is no need for regional fiscal harmonization as the cities can be able to run and finance their various projects. Entrepreneurial cities have local finance systems, which ensure that their budget and fiscal aspect are met. The regional fiscal front should act as a buffer zone and not as a key legislative measure of comprehensive fiscal structure, which cities need to implement and lose their fiscal autonomy. Cities are able to borrow bonds through markets and pay them back; as evident by even the hurricane stroked New Orleans, which paid back their city bonds.
The regional fiscal front will be subjected to politics of growth, since conflict of interests will take part instead of progressive development, which is fast-trucked by the entrepreneurial cities. Politics has always been known to get on the way of any meaningful development. The proposed approach to fiscal policies will encourage politics of growth to take its course and hinder economic growth of the cities. Studies have shown that in the next few decades the majority of the population will be living in the cities, which means that cities need to grow rapidly so as to accommodate the population, and in business a sound population translates into labor and consumption of the produced products.