Early in the pandemic, Florida municipal managers indicated that forecasting the impact on local revenues was one of their top priorities in responding to the pandemic, yet such a tool has not been widely available. This study offers simple and straightforward fiscal planning guides for assessing the short-term and long-term impacts of the COVID 19 recession on local government revenues by estimating the revenue declines among 411 Florida municipalities from FY 2021 to FY 2023. The forecast results predict revenues will be reduced by $5.11 billion from 2019 pre-pandemic levels for Florida cities in fiscal years 2021 through 2023. The decline is forecast to be 3.54 percent in FY 2021, 4.02 percent in FY 2022, and 3.29 percent in FY 2023. The revenue structure matters for estimating the revenue decline.
The most recent Great Recession brought our attention to the issue of fiscal sustainability of local governments. Local governments often rely on their general fund balances to deal with contingencies and economic downturns. Empirical research, however, produces mixed results and is inconclusive about what determines the size of local savings. No previous research on this topic has considered strategic interactions and the spatial relationship among local governments. Using a panel dataset of all the county governments in Florida from 2007 to 2011, this study examines the factors that affect the size of unreserved fund balances and empirically tests the spatial effects concerning local fund balance policies in Florida. Empirical findings indicate the importance of the spillover effects of a county's millage rate change and reliance on intergovernmental transfers. This research contributes to the literature by accounting for the spatial effects in local fund balance behavior.
Citizen participation in public budgeting processes has been widely advocated by both theorists and practitioners of public administration. Yet there is less agreement on when the public should be brought into the process and how the timing of citizen inclusion affects the outcomes of public agencies. Using survey data about citizen involvement practices utilized by the state departments of transportation (DOTs) across the country, the authors construct citizen input indices for different stages of the budget process and examine the impact of participation on the overall organizational effectiveness. The study results show that citizen participation in the budget process has greatest positive effect on organizational performance at both the early and ending stages of the budget process, namely, the stages of information sharing and program assessment.
Most state governments issue general obligation (GO) bonds in the financial market to borrow money. Assigned by credit agencies, state GO bond ratings reflect states' perceived credit quality and affect their borrowing costs. Despite many studies on the determinants of municipal bond ratings, little has been known about the association between state management capacity and bond ratings because management capacity is generally difficult to quantify. However, state governments' performance grades assigned by the Government Performance Project (GPP) provide a great opportunity to study how people perceive and respond to state governments' management capacity. This study finds that states with higher GPP grades tend to have higher state GO bond ratings, but the relationship may be nonlinear as people are more sensitive to the extremes of perceived performance. In particular, we observe a "performance premium" scenario in which S&P bond ratings grow at an increasing rate as state GPP grades improve.
Municipal annexation has been one of the most widely adopted instruments for urban growth in the United States. Scholars of public choice and regional studies have long debated the fiscal effect of local government annexation. Few studies, however, examine the fiscal effect of municipal administrative annexations in China, where prefectural cities have extensively annexed county-level governments through forcefully converting rural counties into urban districts in a top-down manner. Employing a difference-in-differences (DID) method coupled with an event study approach, we analyzed a panel data set of 282 prefectural cities from 2007 to 2015 to examine the fiscal impact of annexation in China. The findings show that prefectural cities have significantly increased their land conveyance fees through administrative annexation. Given that land conveyance fees serve as one of the most important own-source revenues at the local level, our findings shed light on the crucial link among the urbanization process, government reorganization, and local land finance in China and, potentially, in other transition countries.