ABSTRACT
Introduction Everyone is agreed that state and local governments are facing a severe fiscal crisis and that the structure of local urban governments needs an extensive overhauling. There is no consensus, however, that the absence of some form of metropolitan government contributes to the fiscal problem or that a solution to the local fiscal crisis entails a metropolitan-wide program. The hypothesis of this paper is that the existing structure of metro governance contributes to the fiscal crisis, and that policies to alleviate the fiscal crisis should involve changes in the structure of government as well as in the pattern of local taxation and spending.The fiscal problems of local government go beyond the pressing needs of financing public services, although the demand for public services and their costs do generate the problems. Inadequate revenues can be, and usually are, a consequence of deeper difficulties. Further, the search for purely fiscal solutions may exacerbate urban problems. Any set of financial proposals will have serious implications for the spatial distribution of programs, the capacity of government to provide the desired quantity and quality of public services, and the distribution of benefits and burdens among socioeconomic groups. Therefore policies for local finance, as well as for local government structure, should be based upon a fairly broad set of social and political goals.
