Out of control? : local democracy failure and fiscal control boards

The nation's current recession has strained the finances of local governments such that many cities with already delicate budgets have plunged into fiscal crisis. This dissertation examines three causes of fiscal crisis - a local government's dependence on the market, majoritarian tyranny within federalism, and local democracy failure. Since New York City's highly publicized board in 1975, 119 municipalities of all sizes have been assigned control boards, in which a state appointed team oversees the budgetary decisions of a municipality in fiscal emergency. This study analyzes how control boards address each cause of fiscal crisis. This research builds on the fiscal crisis literature to measure the fiscal impact of control boards. Evidence suggests that boards were implemented in most large cities with fiscal crisis and that those cities recover. However, crisis cities without control boards also improve. Regressions indicate that control boards in municipalities with populations below 25,000 are less successful. The control boards are not assigned to municipalities that most need intervention, and they do not improve fiscal outcomes more than similar cities. This dissertation explores the governance implications of control boards through a framework developed about International Monetary Fund stabilization teams. The literature suggests these institutions can bring technical expertise to ill-equipped governments; offer credibility to governments needing access to resources; and provide a scapegoat for unpopular policies. Conversely, disadvantages include diminished sovereignty; power to external political actors; favorable concessions to the private market; and uncertain benefits.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Urban Studies and Planning.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2009

Author dc:creator

• Kobes, Deborah Isadora

Advisor dc:contributor.advisor

• J. Phillip Thompson.

• Urban Studies and Planning.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/55132

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/55132