Managing Fiscal Strain in Major American Cities: Understanding Retrenchment in the Public Sector.

• Author: Urban, Andrew F.

This book is a timely treatise on how cities react to the increasing retrenchment actions which must be taken to respond to periods of fiscal stress. The book is a good reference work on how governments evolve into fiscal stress and through it using various retrenchment strategies. The author offers two hypotheses regarding the retrenchment process. First, it is a confused process, and second, it frequently reflects the perceptions of the chief executive officer. It is organized into four areas: the evolution of fiscal decline, management techniques, a discussion of the "garbage can" model of retrenchment and considerations of what happens to the public-policy process during retrenchment.

The first chapter is devoted to the causes and consequences of urban fiscal strength. Despite the prolonged economic strength of the 1980s, state and local deficits have deepened, primarily due to the severe reduction in federal aid. The author discusses three traditional models (socio-economic decline, political and bureaucratic expansion) and the bad internal management theory to explain the reasons which are causal in fiscal stress. He concludes that the various studies on the cause and consequence of fiscal stress provide no answers regarding how cities manage revenue declines.

Chapters 2 through 4 discuss the various management strategies for dealing with fiscal stress, in order of precedence. The impetus of forcing managers to implement these strategies is normally a decline in revenue. The three primary traditional strategies are to enhance revenues, to improve productivity and to cut services. Revenue strategies include drawing down on fund balance, raising taxes, imposing or increasing user charges and/or other forms of nonproperty taxation, and various forms of private-sector financing (impact fees or special assessments). Productivity improvement, the next strategy employed, involves a number of programs to improve procedures, work skills, managerial abilities, motivation and technology. Other productivity strategies include alternate service delivery through contracting out, transfer of some services to other governments, use of citizen volunteers, joint operations with other providers and regionalization. The final strategy is to cut services, which follows three basic sequential patterns: deny and delay, stretch and resist, and cut and smooth. These three techniques depend on the severity of the fiscal stress. Due to the repercussions from...