As local governments respond to fiscal stress after the global financial crisis, some scholars warn about an austerity urbanism response wherein local governments cut and privatize services, while others see a pragmatic municipalism response that seeks to protect public services by sharing services, applying for more grants, or charging user fees. Existing empirical works lack detail about the types of local government responses and their drivers. Using a structural equation model with 2017 survey data of 919 counties and municipalities in New York State, we explore the drivers of perceived fiscal stress and two responses: cuts and pragmatic municipalism. We find economy, demography, and state policy drive perceptions of fiscal stress and differentiate responses. The dominant response is pragmatic municipalism, and cuts are only dominant in counties and places with more tax-exempt property. Pragmatic municipalism is found not only in places with larger college-educated populations, left-leaning governing boards, and stronger support for maintaining and providing services, but also in places with greater anti-tax sentiments, poverty, and lack of resources for innovation. These results show that local governments use pragmatic approaches to hold back the tide of austerity pressures and respond to local needs within constraints.

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Intermunicipal cooperation is the most prevalent alternative service delivery method for US local governments. While aspirations for budgetary savings are one motivating factor, increased service quality and regional coordination are also important goals. We use an original 2013 survey of local governments in New York State to assess the level of service sharing and outcomes. We match our survey with 20 years (1996–2016) of service-level costs data to explore the relationships between sharing and costs across 12 common local government services. We contribute to the literature by providing the first multivariate assessment of the effect of cooperation on costs in the United States, and we contribute theoretical insights on the objectives and type of cooperation to explain differences in the effects of cooperation on costs across a variety of services. Our multivariate time series regressions find that service sharing leads to cost reductions in solid waste management, roads and highways, police, library, and sewer services; no difference in costs for economic development, ambulance/EMS, fire, water, and youth recreation; and higher costs in elder services, and planning and zoning. These differences are explained by whether services have characteristics such as asset specificity and the ability to achieve economies of scale on the one hand, or if sharing leads to greater administrative intensity or promotes other objectives such as quality and regional coordination outcomes on the other hand. We also analyze the effect of sharing on service costs over time, and find solid waste, roads and highways, police, and library are the only services where costs show a continued downward trend. These results show the limited role for economies of scale, even in asset specific services. Because cost savings are elusive, public sector reformers should be careful not to assume cost savings from sharing. The theoretical foundations for service sharing extend beyond economies of scale and transaction costs. Scholars should give more attention to organizational form and the broader goals of sharing.

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