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Using data from a 2015 national survey of U.S. cities with a population of 50,000 or more, this research examines cities’ responses to a budget crisis. The study develops and tests a model of retrenchment choices that categorizes expenditure- and revenue-related actions implemented by cities based on the degree of loss that they are likely to inflict on budgetary actors and the resulting conflict. Factor analysis confirms that city responses can be categorized into two groups representing slight-loss/low-conflict and high-loss/high-conflict retrenchment actions. The study then applies regression analysis to identify the different economic, fiscal, demographic, political, governance, and institutional factors that influence reliance on different groups of retrenchment responses.

Applying the Loss-Conflict Model of Fiscal Retrenchment: Understanding City Expenditure and Revenue Responses to a Budget Crisis