Fiscal Disruptions and City Responses

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Abstract
Building on the theoretical tradition established by Cyert and March, March and Simon, and Wolman, local government is conceived as a social organization engaged in problem-solving activities that maintain an equilibrium between the organization and its external environment. Analyzing 234 cities' fiscal responses to disruptions in the external environment, the author concludes (1) that revenue dedication for capital purposes has not resulted in increasing capital spending, (2) that cities turn to cost-shifting mechanisms primarily because of fiscal pressures, and (3) that capital-spending plans of cities are in general more revenue-elastic than operating programs. These findings confirm the expectations that cities adjust and adapt to their external environment.