ABSTRACT
Most state and local governments intermittently suffer the throes of fiscal crisis. The fiscal problems that can assault governments are legion: inflation, recessions, increased service demands and costs, shifts in population and tax base, declining intergovernmental aid, expensive court orders or settlements, tax and expenditure limits, citizen resistance to tax increases, infrastructure deterioration, burdensome federal mandates, and so on; the list is almost endless. Severe fiscal stress ran rampant during the Great Recession and its aftermath as virtually all state and local governments, as well as the federal government, struggled to balance their budgets. Some failed; among them were Jefferson County, Alabama; Central Falls, Rhode Island; and San Bernardino, Stockton, and Mammoth Lakes, California. All filed for bankruptcy protection during 2010–2012. Financial adversity has become a chronic affliction for some state and local governments, particularly those that have been net losers in coping with the challenges of technology and global markets. The major social, economic, and political forces contributing to government fiscal stress show little sign of abatement. Meanwhile, state and local government employment and payroll costs have risen steadily. States employ more than 4.4 million full-time equivalent workers, and local governments employ approximately 12 million. Total state and local payroll costs exceed $70 billion (U.S. Census Bureau 2012).
