ABSTRACT
The public budget is an historical repository of the effects of economic change and political conflict. New modes of production transform the location and forms of wealth and thereby also transform the state's capacity to finance its expenditures. This chapter first reviews a number of such theories as they have been developed to explain the urban fiscal crisis, then suggests the beginnings of a more comprehensive perspective which incorporates but also transcends these theories, and finally applies more perspectives to an interpretation of the fiscal crisis of American cities. Perhaps the most widely used theory of state finance, and the most parsimonious, is the theory of public choice, which employs the model of a market place to analyse patterns of municipal expenditure and taxation. The public choice approach assumes that elected officials control municipal government and that the agencies of government are neutral respondents to a marketplace in which votes and movement are the main currencies.
