A Survival Analysis of U.S. Municipalities in Fiscal Distress

John M. Trussel and Patricia A. Patrick

International Journal of Public Administration, 2012, vol. 35, issue 9, 620-633

Abstract: This article uses survival analysis to investigate fiscal distress in U.S. municipalities. We hypothesize that fiscal distress is positively correlated with revenue concentration and debt usage, and negatively correlated with administrative costs and entity resources. We develop a model that can predict the likelihood of fiscal distress and correctly classify up to 86 percent of the sampled governments. The model enables users to analyze the impact of a change in the risk factors. Fiscal distress can be reduced most effectively by increasing tax revenues as a percent of total revenues or decreasing total debt as a percent of total revenues.

Date: 2012
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DOI: 10.1080/01900692.2012.661189

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