The Timing of Managerial Responses to Fiscal Stress

• Published date: 01 May 2021
• Author: Spencer T. Brien,Robert J. Eger,David S. T. Matkin
• Date: 01 May 2021
• DOI: http://doi.org/10.1111/puar.13359

Research Article

414 Public Administration Review • May | June 202 1

David S. T. Matkin

Abstract: Using 34 years of data from Florida counties, we examine the effect of multiple fiscal stressors on

expenditures over time to test theoretical propositions in Charles Levine’s seminal study on cutback management.

We demonstrate support for Levine’s stages model and his claims on linkages between the causes of fiscal stress and

managerial responses. Specifically, unemployment levels produce differential effects by service area (e.g., human

services bear the most significant share of the reductions), especially in relation to the persistence of the stressor. We

cannot support the stages model with other stressor measures. We expand the literature to include county governments,

enhancing the contemporary literature on local government fiscal stress.

Evidence for Practice

• Persistently high unemployment leads county governments to follow the stages model of cutback

management, where governments first respond with across-the-board spending cuts and then proceed to

targeted cuts as the stressor persists. Unemployment statistics are among the most accessible and comparable

economic statistics, and government administrators would do well to carefully track local unemployment

conditions.

• As fiscal stressors persist over time, the effects are not evenly distributed across government functions. This

result means analysts should avoid using aggregate measures of government spending to track the effects of

fiscal stressors.

• The findings demonstrate that county government responses are comparable with those observed in

municipal governments (e.g., Hendrick 2011), suggesting generalizability in contemporary county

management with other local governments.

Allocating scarce resources during times of

fiscal1 stress is among the most controversial

and vital decisions in public service. This

allocation process engages diverse stakeholders, such

as politicians, managers, and the constituents they

serve, and it exposes core organizational priorities,

pushes analytical and strategic capacities, and strains

organizational morale and employees’ job satisfaction

(Levine1984).

As demonstrated during the 2007–2009 U.S.

national recession, even well-managed governments

are likely to go through periods of fiscal stress

and have difficulty balancing their budgets. As

an initial response, governments may attempt to

alleviate fiscal stress by seeking additional revenues,

a strategy that is often politically infeasible (Carr,

Elling, and Krawczyk2010; Finegold, Schardin,

and Steinbach2003; Shubik, Horwitz, and

Ginsberg2009). Even if there is sufficient political

support to increase taxes, fees, or charges, the process

to approve and collect additional revenues is often

too time-consuming to satisfy current financial needs

(Hoene and Pagano2010). External support from

intergovernmental grants may be too little and too

late, due to lengthy application processes. Therefore,

to balance their budgets, public managers are often

compelled to reduce budgetary support for current

public services.

Of course, decreasing current services creates

significant challenges (Bozeman and Allen

Slusher1979; Glassberg1978; Levine1979). For

example, it is not always clear which service areas

are already operating close to maximum efficiency,

where decreasing support may be particularly

harmful. Public employees (e.g., public safety workers,

librarians, and school teachers) and constituents of

public services (e.g., participants in local recreation

programs and parents of special-needs children)

regularly lobby government officials to protect their

services from decreases. Government practitioners

may respond to these constraints by imposing across-

the-board reductions that affect all city services

The Timing of Managerial Responses to Fiscal Stress

David S. T. Matkin is an associate

professor of public financial management

at the George W. Romney Institute of

Public Service and Ethics at Brigham Young

University. He is an associate editor of the

Journal of Public Budgeting, Accounting,

and Financial Management

. His research

focuses on public service organizations’

financial management, especially financial

accountability, public pensions, and debt

management.

Email: david_matkin@byu.edu

Robert J. Eger III is a professor in the

Graduate School of Defense Management

at the Naval Postgraduate School. His

teaching and research interests encompass

public financial management, resource

allocation, and decision-making, with

a focus on the intersection between

accounting and public policy.

Email: rjeger@nps.edu

Spencer T. Brien is an assistant professor

in the Graduate School of Defense

Management at the Naval Postgraduate

School. He has published in such journals

as the

American Review of Public

Administration

,

Public Budgeting & Finance

,

Public Finance Review

, and the

Journal of

Public Procurement

.

Email: stbrien@nps.edu

Public Administration Review,

Vol. 81, Iss. 3, pp. 414–427. © 2021

American Society for Public Administration.

This article has been contributed to by US

Government employees and their work is in

the public domain in the USA.

DOI: 10.1111/puar.13359.

Brigham Young University

Naval Postgraduate School

Robert J. Eger III

Spencer T. Brien