All Fiscal Help Is Local

Source: Penelope Lemov, Governing, January 13, 2011

The list of cities in fiscal stress is growing. Will states intervene to help them work out their fiscal problems?

These are challenging times for localities: Cities and counties are reeling from devastatingly low tax and fee collections, extraordinarily high demand for services and a disheartening diminishment in state aid. There’s a list of growing cities in fiscal stress, and the media is full of stories about imminent municipal bankruptcies.

What’s sometimes forgotten in all the chatter about possible bankruptcies on the local level is that many states have a method of intervention to help a city or county work its way out of its fiscal problems. It’s called a fiscal oversight board. New York City overcame its fiscal crisis in the 1970s with the help of such a board, as did Miami and the District of Columbia in the 1990s. More recently, Rhode Island put one in place in Central Falls.

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