US sub-national governmental response to the ‘Great Recession’: implications for the ‘equitable distribution of the costs and benefits of public services’
| Published date | 01 September 2017 |
| Author | Blue Wooldridge,Heidi Jane M. Smith |
| DOI | 10.1177/0020852315585056 |
| Date | 01 September 2017 |
| Subject Matter | Articles |
International Review of
Administrative Sciences
2017, Vol. 83(3) 425–442
!The Author(s) 2015
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DOI: 10.1177/0020852315585056
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International
Review of
Administrative
Sciences
Article
US sub-national governmental
response to the ‘Great Recession’:
implications for the ‘equitable
distribution of the costs and
benefits of public services’
Blue Wooldridge
L. Douglas Wilder School of Government and Public Affairs,
Virginia Commonwealth University, USA
Heidi Jane M. Smith
School of Policy, Government & International Affairs (SPAGIA),
George Mason University, USA
Abstract
Experts suggest that when faced with fiscal stress public managers can engage in three
coping practices: an actual cutback in services, expansion of existing financial resources,
or reduction in work force. During the Great Recession (2007–2012), US subnational
governments utilized all three of these practices. The purpose of this article is to
identify coping mechanisms used by state and local governments to respond to the
Great Recession, and identify approaches to minimize the negative and disproportion-
ate impact of these actions on women, minorities, and the economically disadvantaged.
The authors provide specific examples of tactics employed by US subnational govern-
ments in response to fiscal stress and evaluate the equity of their consequences on the
distribution of goods and services. A review of the concept of social equity, its related
literature, and an analysis of the disparate impact of coping practices on underrepre-
sented groups is provided. Finally, the article presents mitigating strategies in order to
reduce the regressive impact of these coping practices on the vulnerable populations.
Points for practitioners
This article identifies ‘coping’ strategies used by US Subnational Governments in
response to the Global Recession. It presents the inequities caused by these responses
and suggests some ‘mitigating’ strategies to reduce the regressive impact on the
disadvantaged.
Corresponding author:
Heidi Jane M. Smith, School of Policy,Government & International Affairs (SPAGIA), George Mason University
Arlington, VA 22201, USA.
Email: hsmith32@gmu.edu
Keywords
ethics, public finance, public sector reform, regional and local government, service
delivery, social equity
Introduction
The period of recent decline in the US economy commonly known as the
Great Recession was the most severe constriction of the American economy since
1947 (NBER, 2013). While the economic downturn had a significant impact on the
national economy from 2007 to 2009, nowhere was this strain felt more than on
subnational governments, which include the 50 states and more than 89,000 local
governments. Data from this study come from the National Governors Association
(NGA) and the National Association of State Budget Officers (NASBO) for state
governments. For local governments we consider data for general-purpose govern-
ments, which for the United States incudes 36,000 municipalities and the 3036
counties. Data for this level come from the National League of Cities’ (NLC)
fiscal conditions report for the appropriate years, a survey conducted by
Florida’s Survey Research Center to local governments as reported in Perlman
and Benton (2012) and, finally, the most recent data from the National
Association of Counties (NACO, 2015) tracker 2014 data.
According to the NGA, 40 states proposed budget cuts up to 6.3 per cent and
3.8 per cent in fiscal years 2010 and 2009, respectively, and despite the escalation of
state general fund spending in FY 2012 to $18.7 billion, state spending remained
2.7 per cent below its peak in 2008 (NGA and NASBO, 2011: 1). Revenue declines
for local governments were somewhat slower to materialize.
1
This is primarily
because the recessionary effects took time. Still nearly nine in ten (87%) public
finance officers reported that their cities were less able to meet fiscal needs in 2010
than in previous years (NLC, 2010). Perlman and Benton (2012) reported that both
city and county jurisdictions are preoccupied with budget deficits and the revenues,
but not focused on the specific source of those revenue streams, thus suggesting
that public officials are more focused on the economy in general than on a par-
ticular market to improve their local finance.
Fiscal stress in US subnational governments continues as finance officers look to
the close of each fiscal year and project declining revenues. This stress has become
the new normal in public finance and service delivery (Perlman and Benton, 2012).
Cities are particularly hurt by diminished property tax revenues, as these changes
foreshadow the inevitable and lagged impact of real-estate market declines. Ending
balances, or reserves, declined by over 25 per cent in four years and, while still at
modestly high levels, are projected to decline further as cities use these balances to
weather the effects of the downturn (Pagano et al., 2012). It is likely that local
governments, especially those highly dependent on property tax collections, will
feel the belt tightening for years to come as the housing market recovers slowly and
home prices show modest gains (Depaul, 2011).
426 International Review of Administrative Sciences 83(3)
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