Dealing with Austerity: a case of local resilience in Southern Europe

Southern countries are undergoing a severe economic crisis that has renewed debates about the available strategies to economise their public resources. Political leaders have launched a wide range of different strategies aimed at reducing spending. According to generally accepted political discourse, drastic actions should be taken to guarantee economic and financial sustainability in times of austerity. We explore the main measures adopted by Spanish municipalities in order to examine their impact in budgetary terms. First of all, we identify the most frequently implemented mechanisms including organisational structure, public services and operational economic restructuration. After their quantification, we monitor the presence and impact of each set of policies to analyse the relationship between concrete measures and effective economic impact. The effective reduction of budgets is being implemented but data show that local governments are resilient to non-compulsory changes. The ‘government at a distance’ policy pursued by the central state administration has effectively reduced budgets but has not affected the institutional core of Spanish local governments.     

Can alternative service delivery save cities after the Great Recession? Barriers to privatisation and cooperation

ABSTRACT

Cities continue to face fiscal challenges after the Great Recession and alternative service delivery is being emphasised as a solution. How promising is alternative service delivery as a solution and what are its barriers? Regression analyses using 2012 survey data of US local governments show that local governments manage procedural barriers, but structural barriers of economy and demography hinder privatisation and cooperation. Places with a housing bust (measured as decline in home values) can use privatisation, but not places with more or increased poverty. Cooperation is more promising for places with increased poverty, but lack of a willing partner hinders this spatially constrained tool. Neither cooperation nor privatisation is promising for places with low home values. State governments must level the playing field for localities with weak economies if market approaches to service delivery are the main tools for local governments to survive fiscal stress.     

COMPETITION OR MONOPOLY? COMPARING PRIVATIZATION OF LOCAL PUBLIC SERVICES IN THE US AND SPAIN

Differences in national traditions of public intervention, institutional arrangements and public service markets make local public services an area of great diversity. In this paper we undertake a comparative study of how local governments arrange for delivery of water and waste services in the US and Spain. We find levels of privatization are higher in Spain than in the US. We review organizational reform in the two contexts and compare service delivery data using national surveys from each country. We find lower and less stable privatization in the US stems in part from adherence to public choice emphasis on the benefits of market competition over public monopoly. By contrast, Spanish municipalities reflect an industrial organization approach, and create hybrid public/private firms which benefit from both market engagement and economies of scale available under monopoly production. We conclude that managing monopoly may be more important than competition in local service delivery.     

Revenue Portfolio and Expenditures: An Examination of the Volatility of Tax Revenue and Expenditure Patterns during the Great Recession

ABSTRACT

Local governments in the United States are diversifying their revenue streams and becoming less reliant on the inelastic revenue from property taxes. This article examines both how this affects local governments’ revenue stability in economic downturns as well as their levels of expenditures in key functions: capital and social services. Using data from North Carolina counties from both before the Great Recession and after, this article examines reliance on local sales taxes and stability of revenue. The findings suggest that dependence on local sales taxes do increase volatility and reduce expenditures on social services, all else being equal.     

Evaluating local government performance in times of crisis

In recent years, Spanish local governments have come under increasing pressure to accommodate severe economic restrictions while maintaining their provision of local public services. We analyse overall cost efficiency in Spanish local governments during the period of the economic crisis (2008–2013), under four different non-parametric methodologies. Moreover, given how problematic it is to precisely define what municipalities do, we compare three different output models with various measures of quantity as well as quality. Results suggest that Spanish local government efficiency improved over the period 2008–2013 since budget expenditures (inputs) fell while local public services and facilities (outputs) were maintained. We also find evidence of the possible implications of service quality when measuring municipalities’ efficiency, and of structural differences in the average efficiency between municipalities located in different Spanish regions. Finally, our results confirm that the level and variation of efficiency scores are affected by the approach taken.     

LEARNING FROM SUCCESS: ARE SUCCESSFUL GOVERNMENTS ROLE MODELS?

Do local governments learn from their successful peers when designing public policies? In spite of extensive research on policy diffusion and learning, there is still a lack of studies on how success relates to learning patterns. We address this deficiency by examining which other governments local administrative units draw lessons from. More precisely, we investigate whether public managers learn from the experiences of local governments whose citizens are satisfied with government services. Using a large dyadic dataset on all Swedish municipalities from 2010, we find that senior public managers in local administrations learn from similar local governments and from neighbours. But we also find clear evidence that they learn from local governments whose citizens are pleased with local public services. This indicates that best practices are spread among local governments.     

Querying the resilient local authority: the question of ‘resilience for whom?’

ABSTRACT

Analysis of how English local authorities (LAs) have fared post large cuts to their funding by the Coalition and now Conservative governments indicates a considerably resilient organisation. Engaging with recent critical strands in the resilience literature this paper, however, queries that resilient LA account. Better consideration of resilience’s repercussions across the landscape of local services provision is needed. The question of ‘resilience for whom?’, drawn from the conceptual literature, is introduced and frames an exploration of the experiences of LA resilience strategies among small charities in deprived areas of London. Deleterious dimensions of resilience are seen in its distancing and de-coupling effects and associated voluntary provider fading. There are losers and a dark underside to explore. Such perspectives add to the local government and austerity scholarship insight as to the noted ‘austerity puzzle’ and a questioning of its tendency towards a ‘great survivor’ account.     

Contracting out local road and park services: economic effects and their strategic,contractual and competitive conditions

ABSTRACT

The economic rationale for contracting out local services is increasingly contested by empirical research. This article aims to contribute to this literature, first by scrutinising the economic effects of contracting out in local road and park services and, second, by exploring how characteristics such as markets, contracts, municipal strategies and contracting history influence these outcomes. Drawing on original survey data from Danish municipalities, we find that competitive tendering has on average reduced costs. Further analysis shows that savings are not associated with lower quality, thus indicating that ‘quality shading’ was not taking place. Another finding is that municipalities that repeatedly contract the services experience smaller savings, suggesting that competitive tendering is subject to declining marginal returns. Finally, we find that larger municipalities and those emphasising expenditure cuts realise larger savings, whereas the characteristics of markets and contracts do not seem to explain variations in cost savings.     

Financial and Political Factors Motivating the Privatisation of Municipal Water Services

Financial and political factors are widely considered to be an explanatory factor of the privatisation of public services. However, the empirical evidence in this respect is not convincing. This paper considers elements of long-term financial condition and ideological and political strength, together with other socio-economic factors and the effects of the current global financial crisis, to address the financial stress–privatisation relationship, with respect to urban water services, observed during the period 2002–2012 in Spanish municipalities. A discrete time survival model is applied, and the results obtained show that certain elements of financial condition, together with political and ideological factors, are decisive influences in decisions to privatise urban water services. We also highlight the major impact of the Great Recession and its effect on the financial stress–privatisation relationship.     

Economic resilience after the Great Recession: an examination of unreserved fund balance in Michigan counties

ABSTRACT

This paper examines fiscal slack, in the form of unreserved fund balance, as a tool used by local governments to enhance economic resilience. It adapts ecological, engineering, and organisational definitions of economic resilience and investigate their relevance to local financial management in the United States after the Great Recession in 2008. Using group-based trajectory modelling, we identify different strategies of fund balances used by Michigan counties. The change of fund balance does not delineate any pattern theorised by the resilience concepts. We also find different factors that motivate local officials to manage their fund balances differently. The study suggests a nuanced understanding of fiscal slack used by local governments for economic resilience that goes beyond unreserved fund balance.     

Contracting personalization by results: Comparing marketization reforms in the UK and Australia

Market instruments are increasingly used to drive innovation and efficiency in public services. Meanwhile, many governments recognize the need for services to be more personalized and ‘user-centred’. This was a key aim of major welfare-to-work reforms in both the UK and Australia over the past decade, which sought to achieve personalization through increasing service delivery by for-profit providers, contracted via Payment-by-Results. Drawing on three surveys of frontline staff, we show the impact of recent UK and Australian marketization reforms on frontline practices to consider whether the reform mix of increased commercial provision tied to Payment-by-Results has enhanced service personalization. We find that the UK's ‘black box’ model was associated with some increase in frontline discretion, but little evidence that this enhanced personalization, either compared to previous programmes or to Australia's more regulated system.     

Russian Nonprofits as Contracted Providers of Municipal Social Services: Initial Experience

Abstract

In the Russian Federation the delivery of social services to deserving population groups is mostly the responsibility of municipalities and other local governments. Services are delivered by municipal agencies. One way to inject competition into the delivery system is for local government to hold competitions to contract for social service delivery. The competitions can be open to nonprofit organizations (NPOs), some of which have been providing assistance in recent years to needy individuals and families similar to those that would be contracted. This article reports the results of an assessment of pioneering pilot competitions for the delivery of social services in three municipalities in 2000–2001: Perm, Velikii Novgorod, and Tomsk. The objective of the pilots was to determine if the local governments could hire NPOs to be service providers following a rigorous and fair competitive process and whether the selected NPOs would do an adequate job in delivering services. In general the results of these competitions indicate the extent of the challenge to improving service delivery in Russia. It seems fair to say that the competitions in Perm and Tomsk were essentially a competitive grant process where the winners were more or less free to determine the services actually delivered. On the other hand, the Novgorod competition had much more in common with a contractual procurement of social services—the competition was nominally open to firms of all legal forms and the services were well-defined. In execution, the reality in Novgorod fell far short of this model.     

Searching for Exits from the Great Recession: Coordination of Fiscal Consolidation and Growth Enhancing Innovation Policies in Central and Eastern Europe

To overcome the Great Recession that started in 2008, the European Union (EU) has opted for a strategy that combines austerity-driven fiscal and experimental ‘growth-enhancing’ research, development, and innovation (RDI) policies supported by different coordination mechanisms. We analyse the experiences of four Central and Eastern European economies—the Czech Republic, Estonia, Poland, Slovenia—in implementing this strategy. Given the weak policy capacities both in the EU institutions and CEE economies to draft and coordinate such novel RDI policies, we find that the implementation of this strategy is more challenging under the current EU fiscal and economic policy coordination system than assumed by the EU.     

EMBRYONIC ASSOCIATIONALISM: NEW LABOUR AND URBAN GOVERNANCE

This article considers the role of ideas in New Labour’s approach to the governance of urban regeneration and characterizes this approach as ‘embryonic associationalism’. This approach contrasts with the economic rationalism of previous Conservative governments and leads to a more determined effort to empower local community groups within the policy process. We analyse the effects of this shift in approach in practice through a comparative case study of changing patterns of governance in different areas of the English city of Sheffield over a ten‐year period. We conclude that while other factors are important in shaping the nature of community empowerment, New Labour’s approach has promoted a political environment in which it is increasingly difficult for local state actors to ignore the voice of local communities. However, while we refer to this as ‘New Labour’s approach’, we are clear that this relates to a tradition of ideas that is far from new in Labour thought.     

Strategic Commissioning in the UK: Service Improvement Cycle or Just Going Round in Circles?

This article explores the drivers of the development of strategic commissioning over the last two decades, its limitations, and the implications of its rapid spread. It suggests that the differences between government departments have allowed scope for local variations, which have been exploited by local government, leaving room for more innovation than would have been possible under an entirely ‘joined-up’ government agenda. The forms taken by this new approach to strategic commissioning were consistent with continual pressure from central government to find ways of promoting externalisation of public services. Although this underlying drive was often resisted, particularly at local level, but always re-emerged. The article ends by exploring the implications of this analysis for public services in the era of fiscal austerity under the new UK Coalition government.     

Diffusion of Personalised Services among Dutch Municipalities: Evolving Channels of Persuasion

In many European countries, municipalities are becoming increasingly important as providers of electronic public services to their citizens. One of the horizons for further expansion is the delivery of personalised electronic services. In this article we describe the diffusion of personalised services in the Netherlands over the period 2006–2009 and investigate how and why various municipalities adopted personalised electronic services. In achieving this, we analyse data that were gathered during interviews with key stakeholders in 10 selected Dutch municipalities. We synthesise the findings in an explanatory model of personalised electronic service delivery diffusion. The model emphasises persuasive pressures that are channelled to potential adopters of personalised services. Furthermore, the model shows how persuasive pressure (as perceived by adopters) is followed-up by organisational search activities, and how, in various circumstances, the idea of personalised services is ‘framed’ by innovation champions, knowledge brokers and new members of staff as to appeal to specific organisational priorities and ambitions. In doing so, this article contributes to an institutional view on adoption and diffusion of innovations, in which (1) horizontal and vertical channels of persuasion and (2) human agency, rather than technological opportunity and rational cost-benefit considerations, account for actual diffusion of innovations.     

Local governance under the Conservatives: super-austerity,devolution and the ‘smarter state’

Through their ambitious devolution programme, the Conservatives show a new assertiveness in relation to restructuring the local state, in contrast to the laissez-faire approach of the previous Coalition government. Although the Coalition piloted devolution, its signature policies of ‘localism’ and the ‘Big Society’ focused on non-state actors, providing rights and opportunities for communities to challenge local government and establish their own services. The Conservatives are promoting devolution as a strategy to stimulate economic growth based on greater sub-regional autonomy and increased competitiveness across and between English localities. ‘Combined authorities’ have the opportunity to champion local identities and acquire new economic development powers from Whitehall. But devolution could be a strategy to decentralise austerity, shifting responsibility to the local level for deeper cuts (56% by 2020) and inevitable service reductions. Local government confronts ‘super-austerity’, where new cuts come on top of previous ones, compounding original impacts and creating dangerous (and unevenly spread) multiplier effects. The Conservatives’ ‘smarter state’ policies, aimed at delivering ‘more for less’, amount to little more than a recycling of new public management diktats. The emerging patchwork of ‘devolution deals’ challenges the redistributive assumptions of the grant regime and could leave disadvantaged areas at particular risk of failure. ‘Metro mayors’ are intended to provide visible and accountable leadership; but roles for locally elected councillors, and prospects for community and citizen engagement, remain unclear. The public has yet to be adequately engaged in what is in danger of becoming a technocratic transfer of power.     

Big change,little change? Punctuation,increments and multi-layer institutional change for English local authorities under austerity

This paper draws on new institutionalist theories to consider how we might characterise the process and outcomes of change occurring in English local government as a result of the UK’s austerity policies. It uses national and local empirical data to argue that changes are best understood as multi-layer processes, whereby radical ‘punctuated’ shifts in national funding can be mitigated to incremental adjustments in service delivery at a local level. However, the paper also suggests that the incremental appearance of change may be temporary, and that diminishing institutional resilience and emergent discursive shifts potentially prefigure a paradigm change in local governance.     

Why Do Municipalities Cooperate to Provide Local Public Services? An Empirical Analysis

Intermunicipal cooperation is being increasingly adopted in various countries as a part of local service delivery reforms. This article draws on survey data from Spain's municipalities to examine the reasons underpinning the decisions of local governments to engage in intermunicipal cooperation and privatisation. Our empirical analysis indicates that small municipalities prefer to rely on cooperation for reducing costs, while their larger counterparts prefer to privatise the delivery of services. By cooperating, scale economies can be achieved with lower transaction costs and fewer concerns for competition than is the case via private production.     

Municipal Socialism Then and Now: some lessons for the Global South

Given the large and growing literature opposed to the privatisation of services such as water and electricity, it is peculiar that so little has been written about the experience of ‘municipal socialism’—a set of roughly analogous historical movements that used local governments to challenge private service delivery and advance ‘socialist’ agendas from the late 1800s to the 1940s. Although primarily a European and American phenomenon, and emerging from different contexts than those prevailing today, municipal socialism found widespread support and transformed many public services. Results were mixed, with some experiments being little more than (pre)Keynesian attempts to revitalise capital accumulation in the face of ‘irrational’ private sector services, but the lessons are important as these experiments provided the first intellectually and politically sustained resistance to privatisation and other prototypical forms of what we now call neoliberalism, and demonstrated the possibility of effective service delivery by the public sector. This paper reviews these experiments, focusing on the experience of the United Kingdom and drawing lessons for contemporary efforts to build alternatives to privatisation in cities in the South, where local-level, socialist-oriented reforms have been relatively strong.