The Fiscal Consequences of Changing Federal and State Revenue Policies: The Case of Small Oregon Cities

This article examines the fiscal consequences for twelve, small Oregon cities of recent changes in federal and state intergovernmental revenue policies. Many small local governments have experienced double revenue reverses in recent years-reductions in own-source revenues because of economic decline as well as decreases in intergovernmental revenues, especially federal aid. The twelve small cities are compared with all 241 cities in Oregon and the 136 Oregon cities in the 1,000 to 49,999 population range. Using aggregate and interview data, a majorfuinding is that although stabilization and/or decline in federal-state revenue sharing and entitlement program funds have accentuated difficult local revenue situations, economic decline has been the more important contributor to the fscal stress of the twelve small municipalities. Most of the twelve cities had limited fscal capacity-as indicated by low assessed property valuationsmaking it difficult to produce sufficient revenue to meet basic public service needs. These cities were also unable to get citizen approval of increases in property taxes