Local Government Decisions in a Time of Economic Decline: A Study of County Government Budget Policy During the Great Recession

This dissertation examined the literature of cutback management in the context of the Great Recession. Specifically, it studied the relationship between cutback management policies used by county governments during the recession and revenue changes. The purpose of this dissertation was to test whether or not the percent change in revenue had an impact on the probability that cutback management policies were used in the recession. According to the cutback management literature developed in the 1970s and 1980s, there should be a relationship. The theoretical framework used for this study was the rational-approach framework, which proposes that every expenditure reducing and revenue increasing policy is enacted based on the percent decrease in revenue the government faces. This suggests that the cutback management policies are a proportional response to revenue decline. The framework was operationalized by using a binary logistic regression that used policy en actment as the dependent variable and the percent change in revenue as the independent variable. Eighty-six counties were sampled and 7 years of each county's budget book were examined for policies and financial data. The research found that eleven expenditure policies and three revenue policies had a statistically significant relationship with the percent change in revenues. This resulted in the conclusion that the framework and, therefore, the cutback management literature were useful in explaining primarily expenditure policies.