Budget Retrenchment in Small Cities: A Comparative Analysis of Wooster, Athens and Ohio

Weinberg, Mark

doi:10.1111/1540-5850.00650

Cited by 16 publications

(6 citation statements)

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“…There have been several other studies of financial distress in local governments (e.g. Brown, 1996;Campbell, 1990;Honadle, 1998;Stevens and LaPlante, 1987;Weinberg, 1984). Stevens and LaPlante (1987) suggest that studies of financial distress are best when limited to a specific group of relatively homogenous local governments.…”

Section: Jaar 191mentioning

confidence: 99%

Assessing and ranking the financial risk of municipal governments

Trussel

Patrick

2018

JAAR

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Purpose The purpose of this paper is to develop a model to assess and rank the financial risk of a municipal government (“municipality”). Financial risk is the likelihood that a municipality will experience financial distress. Design/methodology/approach Logistic regression is used with financial indicators to assess the level of financial risk. Then, the municipalities are ranked according to their financial risk. As predictor variables for the regression model, indicators are used that were developed by a Pennsylvania state agency to monitor the financial condition of municipalities. Findings Financial risk is positively associated with debt service, population, tax effort, and public service on roadways, while negatively correlated with intergovernmental revenues, operating position, user charges, capital outlays, fund balances, and tax revenue concentration. The financial risk model is able to correctly classify up to 99 percent of municipalities as either at risk or not at risk of financial distress. Research limitations/implications The financial risk model was developed using data from one state in the USA. Further research is needed to test the model’s application to other states and countries. Practical implications Financial risk is on the rise since the Great Recession. This study may be used by municipal managers, citizens, creditors, and regulators to assess and rank the financial risk of a municipality. Originality/value This study provides a method of classifying municipalities as either at risk or not at risk of financial distress. Previous models of the financial condition of municipalities do not provide a method of assessing and ranking financial risk.

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Section: Jaar 191mentioning

confidence: 99%

Assessing and ranking the financial risk of municipal governments

Trussel

Patrick

2018

JAAR

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“…With regard to operational expenditure, some studies show that maintaining employment and maintaining salary levels is preferred to maintaining the status quo of public services (Glassberg 1978; Levine, 1985; MacManus and Pammer, 1990; Wolman and Davis, 1980). There are, however, more studies which demonstrate that when cutbacks are made, operational expenditure (including salaries) do bear a significant burden – thus providing evidence against the ‘bureaucratic self-interest’ hypotheses (Banner, 1985; Duncombe and Kinney, 1984; Dunsire and Hood, 1989; Hood et al., 1988; Hood and Wright, 1981; Levine et al., 1981a, 1981b, 1982; MacManus et al., 1989; Marando, 1990; Morgan and Pammer, 1988; Weinberg, 1984, Wolman, 1983).…”

Section: Contents Of Cutbacksmentioning

confidence: 99%

“…The most general taxonomy points to the choice between revenue increases, productivity enhancements and expenditure cuts (see, e.g. Higgins, 1984; Levine et al., 1982; Morgan and Pammer, 1988; Pammer, 1990; Weinberg, 1984). This particular article will focus on the decisions that are made after the decision has been made to consolidate and to use expenditure cuts for that purpose.…”

Section: Introductionmentioning

confidence: 99%

Cutback management literature in the 1970s and 1980s: taking stock

Raudla

Savi

Randma‐Liiv

2015

International Review of Administrative Sciences

100

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The main purpose of this article is to take stock of the literature on public sector cutback management in the 1970s and the 1980s, with a specific focus on cutback strategies and the contents of cutbacks. Both theoretical and empirical studies, focusing either on the central or local government level or different policy fields, have been reviewed. The study shows that when governments face cutbacks, they need to address the fundamental choice between across-the-board and targeted cutback strategies. Cutbacks do not occur as one-off single actions but are usually carried out in a number of cutback rounds. The longer-lasting and the more severe is fiscal stress, the more likely it is that the governments will start imposing targeted cuts rather than implementing across-the-board strategies. Looking at the patterns of cutback management in the past is expected to provide useful insights for systematizing the approaches to cutback management and for researching the current crisis. Points for practitioners This article provides an overview of cutback management practices in the 1970s and the 1980s with the expectation that it will contribute to addressing the current fiscal crisis. The pros and cons of targeted versus across-the-board cutback strategies are discussed. The article also looks at various cutback measures including operational cuts (hiring freeze, pay freeze, lay-offs), programme and capital cuts. The study shows that the longer-lasting and the more severe the fiscal stress, the more likely it is that the governments will begin to impose targeted rather than across-the-board cuts. It is found that personnel costs are cut rather reluctantly, and hiring freeze is a dominant measure compared to salary cuts or lay-offs.

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“…There are other fiscal assessment tools, such as Brown's 10-point test to conduct a trend analysis (1993), Ammons' (1995) attempt to establish municipal benchmarks, and Kleine, Kloha and Weissert's (2003) 10-point scale for Michigan. There have been several other studies of fiscal distress in local governments (e.g., Brown, 1996;Campbell, 1990;Honadle, 1998;Stevens & LaPlante, 1987;Weinberg, 1984). Stevens and LaPlante (1987) suggest that studies of fiscal distress are best when limited to a specific group of relatively homogenous local governments.…”

Section: Overview Of the Fiscal Distress Literaturementioning

confidence: 99%

A predictive model of fiscal distress in local governments

Trussel

Patrick

2009

Journal of Public Budgeting, Accounting &Amp; Financial Management

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This paper investigates the financial risk factors associated with fiscal distress in local governments. We hypothesize that fiscal distress is positively correlated with revenue concentration and debt usage, while negatively correlated with administrative costs and entity resources. The regression model results in a prediction of the likelihood of fiscal distress, which correctly classifies up to 91% of the sample as fiscally distressed or not. The model also allows for an analysis of the impact of a change in a risk factor on the likelihood of fiscal distress. A decrease in intergovernmental revenues as a percent of total revenues and an increase in administrative expenditures as a percent of total expenditures have the biggest influences on reducing the likelihood of fiscal distress.

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Budget Retrenchment in Small Cities: A Comparative Analysis of Wooster, Athens and Ohio

Cited by 16 publications

References 0 publications

Assessing and ranking the financial risk of municipal governments

Assessing and ranking the financial risk of municipal governments

Cutback management literature in the 1970s and 1980s: taking stock

A predictive model of fiscal distress in local governments

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