Municipal Fiscal Emergency Laws: Background and Guide to State-Based Approaches

Abstract

Since the Great Recession of 2008, many municipalities have faced difficult fiscal conditions. During these fiscal emergencies, states have often intervened in an attempt to minimize the damage done to credit markets and public safety. This paper is a survey of the resulting state laws, currently in place in 16 states, and their ramifications throughout the country. These laws involve the state government's becoming directly or indirectly enmeshed in local fiscal and governing affairs. The laws vary in the powers each state may use to address a fiscal emergency, from altering union bargaining laws to allowing tax increases to appointing a state receiver to altering a municipality's organizational structure. This paper provides a comprehensive overview of these state policies and some of the factors that may have influenced the adoption of such policies.