| Abstract: | Local governments in the USA are facing increased levels of fiscal stress after the Great Recession. We conducted a national survey in 2012 to assess differences in sources of stress and service delivery responses (privatization, inter‐municipal co‐operation, and public delivery) across places. Our discriminant analysis on 1,889 US cities and counties contributes to the literature on state rescaling. We differentiate three types of stress: fiscal, housing market decline and demographic. Fiscal stress and demographic stress are linked and highest in metro core and rural places, while housing market decline is associated with population density and revenue diversification. Diverse revenue sources can ameliorate some of the fiscal challenges brought on by housing market decline. Regarding service delivery, we find privatization and co‐operation are higher in suburbs. State aid dependence is highest in rural and metro core areas with greater need, but decrease in state aid is highest in the South and West, where fiscal stress is also highest. Decentralization has exacerbated spatial inequality in the wake of the Great Recession challenging the efficiency claims of fiscal federalism. More redistributive state policies are needed. |
