The Role of the State in Supervising and Assisting Municipalities, Especially in Times of Financial Distress

James E. Spiotto

Municipal Finance Journal, 2013, vol. 34, issue 1, 1 - 31

Abstract: States play an important role in assisting municipalities in times of financial distress. Traditionally, states have attempted to supervise local government financing and limit volatility through the enactment of debt limitations and laws that permit the refunding of municipal obligations. Over time, states have developed more sophisticated mechanisms of assisting and providing oversight to their municipalities through the use of receivers, financial managers, and oversight and refinance authorities. Each state has its own, unique approach to these mechanisms. States, mindful of their past efforts, must now develop new mechanisms or fine-tune existing ones todeal with the increasing financial challenges of the future. This paper describes various protections and methods that have been adopted by states to ensure payment of debt obligations by local governments and to provide financial assistance, new mechanisms, and oversight.

Date: 2013
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