State Government Responses to Municipal Fiscal Distress: A Brave New World for State-Local Intergovernmental Relations

Emergency Management 2.0

“…Some recent works (H. Levine, Justice, and Scorsone 2013;Luby 2013;Perlman and Benton 2012;Scorsone 2014) gather different perspectives and filter through the research to categorically surround the issue. There have been several excellent articles that offer histories of fiscal distress from varying perspectives on the causes and treatments (AlBassam 2011;Berman 1995;Cahill et al 1994;Honadle 2003;Martin and Martin 2011). Other research addresses ideas at work and the predictive possibilities for public administration (Ammons, Smith, and Stenberg 2012;Cahill et al 1994;Coe 2008;Kloha, Weissert, and Kleine 2005a) as well as newer research attempts to evaluate responses (Afonso 2013;Jimenez 2013;Luby 2013;Nelson 2012).…”

“…There have been several excellent articles that offer histories of fiscal distress from varying perspectives on the causes and treatments (AlBassam 2011;Berman 1995;Cahill et al 1994;Honadle 2003;Martin and Martin 2011). Other research addresses ideas at work and the predictive possibilities for public administration (Ammons, Smith, and Stenberg 2012;Cahill et al 1994;Coe 2008;Kloha, Weissert, and Kleine 2005a) as well as newer research attempts to evaluate responses (Afonso 2013;Jimenez 2013;Luby 2013;Nelson 2012). This literature review focuses on the broader ideas of fiscal federalism and predictive approaches of fiscal distress to set up the analysis of causal factors for a strategic approach to emergency financial management.…”

“…The emergency status forces the states into a reactionary mode whereby decisions and changes are made from the fiscally distressed position, which can quickly lose sight of the potential long-term outcomes. Cahill et al (1994) concluded through their studies that state responses often assume that the problem is managerial in nature (in contrast to environmentally induced) and short term, ignoring strategic implications while nonetheless leaving the enddays of state oversight terms open. The mitigation of a catastrophe is a function of how likely the event is to occur and what effects it may have on the material welfare of the community.…”

What Do We Really Know about Municipal Finance?

“…Cities experienced modest increases in revenue during the 1990s, yet some claim that revenue has not kept pace with GDP or expenditures (Spain 1993;Pagano 1998). They also noted operating balances declined-a claim not supported by NLC data Several scholars suggested cities were on the verge of huge fiscal crises, citing declining aid, mandates, and infrastructure needs as causes (Bahl and Duncombe 1993; Cahill, et al 1994 Cahill et al 1994). Even though 70 percent of cities in 1993 and 1994 forecast no current revenue shortfall, cities raised fees and taxes as a buffer against the future, citing infrastructure, insurance costs, mandates, and declining aid and crime as future concerns (Axelrod 1995;"Fiscal" 1995).…”

“…If a jurisdiction did not report at all, the Bureau used data from another same-sized, randomly selected city (xii). States often do not enforce mandatory reporting of cities' financial data in a standardized fashion (Cahill, et al 1994).…”