Austerity urbanism or pragmatic municipalism? Local government responses to fiscal stress in New York State

Abstract

As local governments respond to fiscal stress after the global financial crisis, some scholars warn about an austerity urbanism response wherein local governments cut and privatize services, while others see a pragmatic municipalism response that seeks to protect public services by sharing services, applying for more grants, or charging user fees. Existing empirical works lack detail about the types of local government responses and their drivers. Using a structural equation model with 2017 survey data of 919 counties and municipalities in New York State, we explore the drivers of perceived fiscal stress and two responses: cuts and pragmatic municipalism. We find economy, demography, and state policy drive perceptions of fiscal stress and differentiate responses. The dominant response is pragmatic municipalism, and cuts are only dominant in counties and places with more tax-exempt property. Pragmatic municipalism is found not only in places with larger college-educated populations, left-leaning governing boards, and stronger support for maintaining and providing services, but also in places with greater anti-tax sentiments, poverty, and lack of resources for innovation. These results show that local governments use pragmatic approaches to hold back the tide of austerity pressures and respond to local needs within constraints.