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Fiscal Stress after the Great Recession: A Study of Rural Counties in the U.S.

The Great Recession of 2008-2009 had a profound impact on county finances, possibly fundamentally altering state-county fiscal relations. The relationship is driven by weak revenue growth at the state and local levels, coupled with political efforts to restrain fiscal behavior via tax and expenditure limits. This study used a two-part survey to assess the level of fiscal stress in primarily rural counties across the nation. Findings point to various degrees of fiscal stress across states and the limited adoption of innovative ways to deal with it. Many states now employ a much more targeted and limited approach to their local financial assistance. The result is chronic fiscal stress for both rural and urban counties in many states. The recession appears to have resulted in a “reset” in fiscal relations between states and county governments wherein many long-standing aid and revenue-sharing programs were eliminated or curtailed.

Presented by: Biswa Das (Iowa State University) and John Leatherman (Kansas State University).

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