Academic journal article Public Administration Quarterly

The Sachse Problem: Lessons for Assessing City Services in the Wake of the Great Recession

Academic journal article Public Administration Quarterly

The Sachse Problem: Lessons for Assessing City Services in the Wake of the Great Recession

Article excerpt

INTRODUCTION

In 2009, confronted with the most significant economic contraction since the Great Depression, many municipalities faced declining revenues and the need to maintain or increase services. The Great Recession forced cities, whether they had already experienced fiscal stress or in anticipation of difficult fiscal conditions, to look at the costs associated with providing city services and whether they would have the revenue to continue to support service delivery. Several pieces of scholarship (Ammons and Fleck 2010; Ammons, Smith and Stenberg 2012; Hoene and Pagano 2010; Martin, Levey, and Cawley 2012; Nelson 2012; Perlman and Benton 2012) have analyzed municipal reactions to the Great Recession. The general trend among city governments was to begin with small, obvious, and palatable changes that included hiring/pay freezes, delaying capital expenditures and growing revenue through increases in fees or the transfer of funds from rainy day accounts as opposed to tax hikes. The decision to start with basic moves and attempt to weather the financial storm makes sense because of the incremental nature of most budget processes and the bounded rationality that decision makers operate from within (Nelson 2012).

This work picks up on this subject and looks at the unique case of the City of Sachse, Texas who, in the wake of the Great Recession, sought assistance from faculty and stafffrom a local university in gaining an assessment on their services. The result was the creation of an analytical model for comparing the number of Sachse's city services to several other cities. The importance of this project, for both practitioners and academics, are in the observations from the researcher's experiences working with the city and their implications for academic involvement in municipal decision-making.

MUNICIPAL BUDGETS, THE GREAT RECESSION, AND BOUNDED RATIONALITY

For public organizations, the central purpose of a budget is to authorize spending for different departments and, in turn, limit the amount of spending that can be undertaken (Anessi- Pessina, Sicilia, and Steccolini 2012). Literature on this subject tends to focus on the annual budget process (Fenno 1966; Lu and Facer 2004; Rubin 1990, 2000; Wildavsky 1964), although there has been some diversification including recent work that has emphasized the importance of rebudgeting that can occur during the fiscal year (Anessi-Pessina, Sicilia, and Steccolini 2012). When budgeting, governments must assess their fiscal condition, which is their capacity to meet financial and service obligations (Jimenez 2009). The potential for a decline in fiscal capacity induces fiscal stress which can then endanger the ability of governments to meet their financial and service commitments (Jimenez 2009). In the context of municipalities, fiscal stress can occur for a variety of reasons (e.g., economic shocks leading to loss of revenues or structural budget imbalances), but the severity and duration of the Great Recession presented a unique challenge for city councils, mayors, and managers attempting to balance service provision with tight fiscal conditions.

The bursting of the housing bubble and the ensuing banking crisis triggered the worst American recession in a generation. The recession had a significant effect on local governments who saw varying degrees of revenue reductions from losses in property taxes due to declining property values, decreases or elimination of state and federal aid, and lower sales tax revenue from drops in consumer spending. For many municipalities, the reduction in revenue led to concerns about fiscal stress as cities grappled with trying to meet their financial obligations and the demands of their citizens for services (Ammons, Smith, and Stenberg 2012; Hoene and Pagano 2010; Martin, Levey, and Cawley 2012; Nelson 2012). A survey of almost 600 county and city administrators conducted by the State and Local Government Review (reported in Perlman and Benton 2012) showed that clear majorities of city officials believed their budgets and budget deficits were a serious concern in the aftermath of the recession. …

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