Fiscal Health for Local Governments


  • Beth Honadle, Bowling Green State University, Ohio, USA
  • Beverly Cigler, Pennsylvania State University, Harrisburg, USA
  • James Costa, Suntrust Bank, Atlanta, GA

This examination of the fiscal health of local governments offers a "how-to" approach to identifying and solving financial problems. It will serve as a primer for readers interested in understanding financial processes and alternatives, and as a practical guide for those who need access to fiscal measurement tools. Its principal selling point lies in its assumptions: instead of using the vocabulary and research agendas of economists (such as Musgrave, Fisher), finance scholars (Ladd/Yinger) and political scientists (Peterson/Strachota), it will appeal to readers who lack sophisticated knowledge in these areas and nevertheless need practical advice.The book stems from the "Fiscal Health Education Program," an applied economics program at the University of Minnesota. It uses three measures of fiscal health—financial condition, trend analysis, and financial trend monitoring system—as the basis for advocating particular fiscal strategies. The book examines the tools that can be used to assess the condition of a local government's fiscal health and some of the policy causes or remedies for certain situations, as well as some of the strategies governments can pursue to maintain and improve health.
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Academics and students working in budget and finance areas in the fields of public administration, public affairs, government, political science, accounting, planning, and policy analysis; budget managers in small and medium-sized cities and rural municipalities, almost exclusively in the US.


Book information

  • Published: December 2003
  • ISBN: 978-0-12-354751-4


"Honadle, Cigler and Costa have done an excellent job of pulling together a diverse and complex literature on the fiscal health of local governments. This book is a wealth of information for both students of local public finance and local government administrators and elected officials. The methods they outline are rooted on theory, yet have direct practical application." -- Steven Deller, Professor and Community Development Economist, University of Wisconsin-Madison, USA "Fiscal Health for Local Government provides a pragmatic approach for analyzing the fiscal health of local governments. It presents several models for assessing expenditures, revenues and debt within the constructs of changing economic, demographic and political conditions, evolving intergovernmental patterns, and specific legal constraints. The book will be a useful guide for a wide audience including government officials, policy analysts and students of public administration and public finance. It will also be a welcome resource for courses in Fiscal Policy and Administration." -- Marilyn Rubin, Professor, Economics and Public Administration, John Jay College, City University of New York

Table of Contents

PREFACE AND ACKNOWLEDGMENTS CONTENTS CHAPTER 1 Introduction and Overview Scope of the Book and Audience Why Fiscal Health Matters Factors Affecting Local Government Fiscal HealthThe Fiscal Manager's Situation A Fiscal Capacity Framework Summary Discussion Questions References CHAPTER 2 Fiscal Health Literature: Drifts and ReflectionsWhat is Fiscal Health? A Look at the TerminologyInfluences on Fiscal Health Revisited Measuring Fiscal Health What Governments Do About Fiscal Problems Conclusion References CHAPTER 3 Macro Trends Affecting Local Governments Demographic and Social Trends Telecommunications Infrastructure, Technology, and the Global Economy Institutional and Policy Fragmentation Increased Problem Complexity Increased Demand for Services Increased Citizen, Group, and Elected Official Activism Increased Interest in Regional Issues Looming Structural Budget Gaps Conclusion Discussion Questions References CHAPTER 4 Financing Trends and Options Fiscal Federalism Size of Government Local Response to the Macro Trends Local Revenue Sources Regional Sprawl and Local Finances Intergovernmental Assistance Changing Patterns of State Assistance Local Tax Options Property Tax Revisions and Improved AdministrationUser Charges and Fees 1Restructuring the System of Local Government Public Authorities and Special Districts Tax-Base Sharing Transfer of Powers and Intergovernmental AgreementsTrends Interacting with Revenue Diversification 110Conclusions ReferencesCHAPTER 5 Alternative Service Delivery (ASD) Options Types of Alternative Service Delivery (ASD) OptionsCriteria for Evaluating ASD Options Perceived Barriers to Intermunicipal CooperationAssessing Alternative Service Delivery Options Analysis of Current Operations Cost Comparisons Principles of Successful Contracting Contract Preparation and Negotiation Conclusion Discussion Questions References CHAPTER 6 Tools for Analyzing Local Fiscal Health Tool #1: Ten-Point Test of Fiscal Condition Application of the Ten-Point Test to Pleasant CountyTool #2: Fiscal Capacity Analysis Tool #3: The Financial Trend Monitoring System Conclusion Discussion Questions References CHAPTER 7 Analysis and Interpretation Case Study I: Glendon County Case Study II: Sharpelle County Case Study III: The City of Meirwood Discussion Questions CHAPTER 8 Fiscal Effects of Local Government Boundary Adjustments Mixed Lessons from Experience A General Framework A Case Example The Prediction Intergovernmental Aid Impact Impact of Consolidation on Debt Burden Property Tax Impact Impact on North Branch Area School District Impact on Costs Associated with Detachment and Annexation Impact of Consolidation on Local Service Costs Impacts on Farmers The Reality Intergovernmental Aid Impact Debt Burden Property Tax Impact Expenditures Since Consolidation Staffing Changes Summary and Conclusions of the Case Study General Considerations Discussion Questions References CHAPTER 9 Practical Strategies for Local Fiscal Health Be More Efficient Expand the Tax Base Reduce the Demand for Services Shift Costs to Nonresidents Secure New Sources of Revenue Increase Spending Flexibility Improve Management of Existing Resources Diversify Revenue Sources Summary and Conclusion Discussion Questions References CHAPTER 10 Conclusion References INDEX ABOUT THE AUTHORS