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Managing the Fiscal Metropolis During
Recessions
Has anything really changed?
FINANCIAL CONDITION
Balance is measured by looking at financial characteristics relative to each other within governments (and between governments)
Financial condition has dimensions that are not easily compared• Cash solvency• Budget solvency• Service Level• Long-term solvency
Financial Condition is static; Fiscal Stress is dynamic (change in financial condition)
How to Measure Financial Condition?
Measurement of Financial Condition
Fiscal Threats and Opportunities
Delaying: Artful budget manipulation, creative financial management, one-time solutions (buy time)
Stretching and resisting: Strategic, innovative, and selective revenue and spending changes (protect priorities)
Cutting and smoothing: Visible and/or dramatic cuts in services and revenue increases
Extreme survival: Unrealistic, escapist, and radical measures to function at minimum level
Management of Fiscal Stress
Options for Handing Fiscal Stress, I
Options for Handing Fiscal Stress, II
Options for Handing Fiscal Stress, III
Options for Handing Fiscal Stress, IV
Growth initiation: a sleepy town is awakened to residential developers knocking at their door
Rapid growth: adding residents and commerce (later on) at a high rate through development of existing land and annexation
Built out: growth rate declines and anticipating the day when no growth
Redevelopment: population stagnant or declining
Important Threat and Opportunity
Institutional Context
Fiscal capacity is one of most important factors in financial condition
Consistent choice of sound fiscal policies and good financial management (professional heuristics)
Limit conflict among government officials (transaction costs)
Take long-term perspective on growth, development, and capital maintenance
There is more than one path to good financial condition
Policies and Practices that affect Financial Condition