Explaining Local Government Fiscal Policy Making in the United States

Abstract

Many scholars have viewed the financial crisis of 2008 as a turning point in local government fiscal policy making. In this study, this notion is examined by testing the propositions of three current theories of local government fiscal policy making—neoliberal theory's austerity urbanism, municipal pragmatism, and fiscal capacity. The study subjects the theoretical propositions of the three theoretical perspectives to empirical tests using a two-tiered strategy. The first tier draws on U.S. Census Government data to discern nationwide patterns of local government expenditure and revenue generation. The second employs Comprehensive Annual Financial Reports and Annual Comprehensive Financial Reports to correlate spending and revenues patterns for the largest U.S. cities with measures of economic performance and intergovernmental revenues. The findings suggest that the most effective explanation of local government fiscal policy in the U.S. might lie in an amalgamation of the fiscal capacity and municipal pragmatism approaches.