American Hometown Renewal

Do Small Local Governments Fare Well? A Survey of Villages in New York

“…Approximately 35% of villages reported replacing full-time employees with part-time employees to reduce operating costs. Taken together, consistent with the literature that small governments may have fewer employees and services to jettison (Mattson, 2014, 2017), cutting personnel cost and services have not been widely adopted by village governments in New York. Instead, most of them prefer to collaborate with town governments and/or make extra revenue-collection efforts to mitigate fiscal distress.…”

“…For example, when asked about whether villages have received sufficient financial support and administrative support from the state government in developing service-sharing agreements, the absolute majority answered “No,” as shown in Panel B of Table 5. Of note, consistent with studies on small-size local governments, when facing fiscal pressures, villages do not frequently adopt drastic methods, such as cutting services and reducing personnel to cope with fiscal pressures (Mattson, 2017). Rather, most villages prefer to absorb it by building up service-sharing mechanisms with town governments and implementing additional revenue-collection efforts.…”

“…The most frequently discussed causes of fiscal stress include both financial mismanagement behaviors and some factors which are beyond the control of small localities, such as economic shifts from a manufacturing-based economy, an aging population, general population loss, the shrinking of the middle class, and uncertain intergovernmental fiscal relations (Downes, 1987; Hollingsworth & Goebel, 2017; Wolensky & Enright, 1991). To cope with fiscal pressure, localities may adopt revenue enhancement strategies (e.g., raising tax, increasing user fees) and/or some expenditure-side retrenchment strategies, including cutbacks (e.g., wage freeze, benefit freeze, or shift), productivity management (e.g., deferred maintenance, department consolidation, furlough), outsourcing (e.g., privatization, inter-municipal cooperation), co-production, and service/load shedding (Mattson, 2017). But, a smaller tax base usually means that small towns have little room for fiscal policy choice or flexibility in dealing with fiscal pressures, as subsequently discussed in the context of New York.…”

“…The existing studies, however, primarily concentrate either on counties or on large central cities. 1 Although there are case studies examining the plight of small towns or small legacy cities (Hollingsworth & Goebel, 2017; Mattson, 1990, 2014, 2017; Reed, 1988; Wolensky & Enright, 1991), scholars rarely focus on villages. Compared with other layers of local governments, villages are possibly subject to a complicated intergovernmental relationship, more direct public scrutiny, and more fiscal constraints due to a relatively smaller revenue base.…”

An Exploration of Revenue Structure Characteristics in Rural Municipalities

“…All rural towns are small towns, but not all small towns are rural. Scholars have studied a variety of aspects of small town public finance: sales tax rates and differentials (Snodgrass and Otto 1990; Mikesell and Zorn 1986; Luna 2004; Rogers 2004), sales tax collection (Brorsen and Lansford 2013), property tax incidence (Fritz 1982), revenue diversification (Carroll and Johnson 2010), fiscal illusion (Maher and Johnson 2008), fiscal policy planning (Mattson 1994; Dougherty, Klase, and Song 1999; Morton, Chen, and Morse 2008), fiscal health (Hite and Ulbrich 1986; Honadle and Lloyd-Jones 1998), and general revenue and expenditure patterns (Mattson 2016; Brown 2000; Helpap 2017).…”