LOCAL GOVERNMENT REVENUES AND SERVICES AFTER THE GREAT RECESSION

Theories of fiscal federalism argue a decentralized system of governance increases efficiency because local governments can tax and spend according to local preferences. However, local governments are constrained by state policy, demography, and economy and these constraints increased during the Great Recession. How do these constraints shape local government choices and what are the implications for a federalist system? This dissertation uses two national studies and a single-state case study to explore the space for local government choices after the Great Recession. The first paper uses national survey data of US municipalities in 2012 to examine how service provision level and delivery methods are related to local stress and capacity, controlling for community need and place characteristics. Probit regressions show local governments use alternative revenue sources and service delivery methods (privatization and cooperation) to maintain services. The second paper uses 2012 Census of Governments data for 2,396 cities in metropolitan areas to explore how state policy, demography, and local context shape dependence on two important own-source revenues: property taxes and charges. OLS regression results show property tax dependence is higher in places with more capacity, while charges dependence is higher in places with more stress. The third paper uses a case study of New York State to explain how politics shape local government choices. Focus group interviews with local officials show a state-driven narrative of inefficient local governments pressures local governments to maintain services without adequate revenues. The State can shift costs to local governments, while citizens think they can enjoy the same services with lower taxes. The consequences are expenditure cuts across the board and lack of long-term planning. These findings challenge the basic precepts of fiscal federalism regarding efficiency and transparency. This dissertation advances a theory of pragmatic municipalism whereby local governments work within their constraints and try to maintain their role as service-providers. However, this is not a sustainable strategy and the imbalance between local power and responsibilities remain. Under the current system, state level governments can shift fiscal stress to the local level and use the miscommunication between local governments and citizens for political gains