1st Edition
Municipal Fiscal Stress, Bankruptcies, and Other Financial Emergencies
It is di□fficult to find someone who has not heard about the Puerto Rico, Detroit, Michigan, or Orange County, California, bankruptcies. While guides for responsibly managing government finances exist, problems often originate not because of poor financial reporting or financial deficiencies but because issues external to financial wellbeing arise, such as economic, demographic, political, legal, or even environmental factors. Exacerbating the problem, there is not much advice in the existing literature on how to act when municipalities face financial struggles. Filling this important gap, this book explores fiscal health and fiscal hardships, municipal defaults and bankruptcies, and many other aspects to help guide local governments during fiscal distress.
Fiscal hardships negatively affect the quality and availability of public goods and services and, consequently, the wellbeing of residents and businesses living and working in distressed municipalities. Turned off streetlights, unmaintained public parks, potholes, inconsistent garbage pickup, longer response time from emergency services, and multiple other issues that residents of the struggling municipalities deal with, lead to higher crime rates, lower quality of K-12 education, dangerous road conditions, lower housing values, outmigration of wealthier population, and numerous other problems. The COVID-19 pandemic put additional unprecedented pressure on municipal finances nationwide.
In this book authors Tatyana Guzman and Natalia Ermasova evaluate distressed cities and municipalities and provide practical recommendations on improving their financial conditions. What are conditions and signs to look for to not to find yourself in similar situations? What can be done if your municipality is already experiencing fiscal hardships? What are the consequences of fiscal misfortunes? How does one exit a fiscal emergency? This book answers these and other questions and serves as a guide to fiscal health and prosperity for U.S. municipal governments, students and researchers in public finance, and general public management fields.
Preface
1 Introduction
2 Measurements of Fiscal Health and Fiscal Health Monitoring Systems
3 Preventative Treatment and Federal, State, and Local Incentives for Unhealthy Municipalities
4 Legal Aspects of Municipal Bankruptcy
5 Fiscal Stress and Operating Budget
6 Fiscal Stress and Capital Infrastructure
7 Fiscal Stress During the COVID-19 Pandemic
8 Introduction to the Case Studies
9 Case Study: City of Detroit
10 Case Study: Colorado Springs, CO
11 Case Study: Jefferson County, AL
12 Case Study: Pittsburgh, PA
13 Case Study: Central Falls, RI
14 Case Study: Vallejo, CA
15 Conclusions and a Theory of Financial Management and Budgeting During Fiscal Emergency and Bankruptcy
Index
Biography
Tatyana Guzman is Associate Professor in public finance and policy analysis at Cleveland State University. Dr. Guzman received her PhD in public affairs from O’Neill School of Public and Environmental Affairs at Indiana University and also holds an MA degree in economics. Dr. Guzman's primary research interests are in various aspects of the public finance field, including taxation, budgeting, and municipal bond markets. She has published over 20 journal articles and book chapters. Her research has appeared in such peer-reviewed journals as Public Budgeting and Finance (PBF), Policy Studies Journal (PSJ), American Review of Public Administration (ARPA), Journal of Benefit-Cost Analysis (JBCA), Tax Notes, and other outlets. Tatyana has 15 years of teaching experience at Cleveland State University, Indiana University Bloomington (IUB), and Indiana University Purdue University in Indianapolis (IUPUI), where she has taught undergraduate and graduate public finance and budgeting, research methods, economics, and statistics courses.
Natalia Ermasova is a Professor at Governors State University, Illinois, USA. She has a PhD in public affairs (SPEA, Indiana University, USA). Her primary research interests are capital budgeting, business ethics, public finance, leadership, risk-management, innovation management, and public education funding. She was Visiting Professor in Germany (Ludwigsburg Academy for Civil Services), Corvinus University (Hungary) and Fulbright Visiting Professor (SPEA, IU). Dr. Natalia Ermasova is a board member of the International Journal of Public Administration (IJPA) and Co-Editor of Global Encyclopedia of Public Administration, Public Policy, and Governance. More than 60 of her articles, books, and chapters were published in the USA, UK, and Australia. She is the author of six textbooks about budgeting systems, financial management, and risk-management. Her articles have been published in journals including Public Finance and Management, State and Local Government Review, the International Journal of Public Administration, and the Journal of Management Development.
"This is a thoroughly treated, must read book on local government/municipal finance and bankruptcy challenges. The book's uniqueness is its strength on emergency financial management stress, fiscal distress, and government bankruptcy with loss of financial capacity in modern times. The authors have done an excellent job of explaining and illustrating this highly significant feature of contemporary financial management; their work is admirably well done with adequate details without overwhelming the students, researchers, and instructors. The select case studies of the second half of the book supplement the theory, concept, and issues covered earlier, and are extremely useful to readers. Highly recommended for upper undergraduate and graduate MPA students, as well as for courses in public financial management, for its easy to read and substantive content."
– Ali Farazmand, Florida Atlantic University“Ermasova and Guzman provide the reader with an approachable yet thorough understanding of the conceptual underpinnings of fiscal stress, its effects, and remedies that is augmented through the use of carefully selected case studies.”
– C. Kurt Zorn, Indiana University
“Through a compelling review of current scholarship and a detailed discussion of case studies, the authors share with us their wealth of knowledge on the origins of fiscal malaise in U.S. cities and stimulate us to reflect on policy action that can counteract the economic, political, institutional and managerial environments that are conducive to local financial crises. A captivating read for scholars and practitioners interested in the management of local government financial condition!”
– Evgenia Gorina, University of Texas at Dallas
