Understanding Local Government Responses to Fiscal Pressure: a Cross National Analysis

Fiscally pressured local governments face the same basic choices in both the United States and the United Kingdom: whether to increase locally raised revenues in order to maintain existing services or to reduce local services. The article first posits a model of local government decision-making in response to fiscal pressure drawn primarily from organizational and systems theory. Local governments are viewed as organizations concerned with maintaining their equilibrium relationships with their external environment (public employees and their unions). The model suggests a series of hypotheses about how local government will respond to fiscal pressure. Case studies of fiscally pressured local governments in both the United States and the United Kingdom are then utilized to describe actual local responses and to assess the usefulness of the model. The article concludes by setting forth a rough hierarchy of preferred local responses.