Course Number: 90-748

Addressing Local Government Financial Distress

Units: 6

Across the country, local governments, especially older, industrial cities are struggling financially. Recent research conducted in Pennsylvania suggests that a variety of municipalities, from large and small cities to older suburbs to rural communities, share many characteristics of financial distress. Stated causes contributing to distress vary from the familiar, and continuing, “hollowing out” of the city to the suburbs, and related deterioration of the tax base, to the death of major industry, inflexible tax structures, growing “legacy” costs such as pensions and employee health care, ineffective management and elected official leadership and others.

This “mini” course examines current research on the deteriorating financial state of local government and the range of proposed solutions. The discussion will emphasize structural limitations on local government’s ability to address the problem and a fundamental understanding of the relationship between state and local governments. Does local government have the authority and tools it needs to solve its fiscal challenges? How does local government address root causes of distress that aren’t “local” in origin?

A range of proposed solutions to local government fiscal distress will be explored from state takeovers/assistance to economic development, “tax reform,” consolidation, ”metropolitanism,” “disincorporation” of poorly functioning local governments, and others. The goal of the course is to have each student understand and appreciate the range of financial challenges and threats to local governments and to think critically about structural impediments to local solutions and the range of proposed remedies.