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Responses to Recession Era Fiscal Stress: Local Government Strategies in New Mexico

Published in PFM, Vol. 18 No. 1

Severe fiscal constraints on governments, especially local governments, have become a fact of life. This article reports the results of an empirical study of responses by local govern- ments across one state to the fiscal stress following the “Great Recession.” It explores how such factors as the size, types, and forms of government and the severity of the cuts impacted those decisions. The findings show that overwhelmingly, municipalities do not use analytical research to determine their cutback strategies, and for a majority, political pressures present a great challenge during the cutback management process. For almost all of them, expendi- ture reduction is the main strategy. The severity of cuts was significantly related to employee morale and job performance. The vast majority of local governments did not attempt to broaden participation in the decision making process.

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