Population change and fiscal stress in Missouri's third class counties

Abstract

"During the recent recession, local governments struggled to manage budgets as revenues dropped. Because the recession was deeper and longer than any in the past half-century, with a slower recovery, reserve funds were not sufficient. With lower revenue, the majority of local governments struggled to meet the needs and expectations of citizens. Since the Great Recession of 2008-2009, the budgets of local governments have not recovered at the same pace as the economy as a whole. The recession may have created greater demands for government services, and tax bases may have been affected by more cautious spending by businesses and consumers. Slow local budget recovery also may be due to state government decisions, such as changes in tax laws, stagnant or lower state aid, taxation constraints and increasing state mandated services (Aldag et al., 2017). An example of a state tax constraint is Missouri's Hancock Amendment, which limits both state and local governments' abilities to raise taxes. Elected local officials cannot raise taxes without voter approval (Kevin-Myers and Hembree, 2012). Finally, local governments' decisions on taxes and tax incentives have major impacts on their own revenues (White, 2017)."--Page 1.