Literature Review

All over the United States, local governments are faced with federal and state cuts to their budget which have caused tension in their delivery of services and programs. Municipalities are trying many different solutions to help reduce the pressure on their budgets while still meeting the needs of their citizens.

The word fiscal stress is very common among federal, state, and local governments. What does fiscal stress mean to state and local governments? “In terms of a structural definition fiscal stress can be described as constraints put on the local government by its economy (its economic base), its population’s structure (determining the extent of service need), and the cost of providing a unit of service.” (Diaz and Green, Winter 2001).

State and local governments in America are currently facing a historic fiscal crisis. The National Governors Association says that states face the “most dire fiscal situation (fiscal stress) since World War II” (Cauchon, 2003). The continual diminish of the federal government’s role in state and local affairs is reducing the amount of federal grant-in-aid to state and local governments, this is to be tied with additional cuts from the Bush administration. According to the most recent surveys of state fiscal conditions, the sum of reported state budget deficits for the 50 states exceeds $100 billion, an amount equal to about 14 percent of current spending levels. Many elected officials state that because of the fiscal problems that are currently being faced by state and local governments there will be layoffs of thousands of employees and cuts made to key programs such as education, health care, road construction, and other essential government services. In addition, states have been operating at an “anti-tax” environment, in which proposals to increase taxes to balance the budget have been met with public and political opposition. (Cauchon, 2003)

The issues of the budget crisis and fiscal stress has hit very close to home for all Ohio counties, townships, and municipalities. On February 10, 2005 Gov. Bob Taft announced that there would be significant cuts in the state’s Local Government Fund. The Local Government Fund was first established in 1934 when the first sales tax was enacted to support local government activities. Since its inception counties, townships, and municipalities rely on the Local Government Fund to provide funding for many local government services. The proposed cuts to the Local Government Fund will have a drastic effect on all community budgets throughout the state. (G.F., 2005)

Local governments in Ohio are being forced to make decisions about cutting services or raising taxes while continuing to provide a level of services that is satisfactory to citizens. Our goal was to research effectiveness of service delivery by the City of Fairborn, OH, and to prepare them for the potential financial challenges, which includes federal and state cuts to the city’s budget. During the research, the research team assessed what local services citizens felt are most critical before the City of Fairborn reduces or eliminates services to balance the city’s budget. It is our hope that other cities will also be able to use this plan in their local governments. Fairborn is trying to find solutions to meet the demands of their citizens and to make the best of the funds that are available in their budgets. This study will be used to assist the City of Fairborn to broaden their ideas in making informed decision.

Study Overview

Fiscal stress is an issue that federal, state, and local officials continue to struggle with due to a loss of federal and state aid, diminishing tax base, unfunded mandates, increase in costs to run programs, inflation, and the gap between the need versus expectations of citizens for governmental services and the ability and willingness of taxpayers to support those services. Funding cuts at every level especially at the federal and state levels will continue to affect local communities and services they provide for citizens. Municipalities are charged with the task of finding creative solutions to maintain a certain level of service without a huge increase in cost to its residents, or even more important, without having to reduce or eliminate government services.

In order to determine what government services are important to Fairborn citizens, the research was designed to answer the following question: What local government services do residents of the City of Fairborn feel are the most important for the city to provide and maintain?

The research is intended to be used as a guide for city officials to effectively and efficiently make informed choices about services citizens find most important and the type of solutions that will fit the needs of their residents.