The Effect of Form of Government and Citizen Participation on Local Fiscal Health

Fiscal health has recently received increasing attention because of the Great Recession and bankruptcy cases such as the City of Detroit. However, there is no research which systematically explains the determinants of fiscal health with political structure and citizen participation. While form of government and citizen participation are important topics in the public administration literature, they have not been interlinked with government performance. This study aims at better understanding how form of government is associated with municipal fiscal health, taking into consideration the influence of citizen participation. To examine the research questions, this study uses State of the Profession 2012 survey data from the International City/County Management Association (ICMA), paired with data from the 2008- 2012 American Community Survey 5 Year Estimates (ACS) and 2011 Comprehensive Annual Financial Reports (CAFR). Drawing on political insulation theory, this study hypothesizes that the council-manager form with greater commitment to citizen participation is likely to have lower fiscal health. The result shows that citizen participation combined with form of government has mixed effects on fiscal health. Through the results, it should be noted that municipalities can effectively manage fiscal health by recognizing the effect of citizen participation pressure as well as form of government. Furthermore, the implications of the results allow municipalities to adopt elaborate measurements in managing fiscal health and, also, provide a new theoretical concept to public administration. The contribution of this study is a bridge to connect citizen participation with the association between form of government and fiscal health