Municipal Consolidation

Abstract

The authors analyze the expenditures and revenues associated with the potential consolidation of nine small, fiscally distressed municipalities in western Pennsylvania that have lost substantial portions of their tax base as a result of the closing of steel mills and related heavy industry. The analysis includes the collection of consistent financial information, the creation of forecasted base-case 1989 revenue-and-expenditure scenarios, and their juxtaposition for the nine jurisdictions against consolidation scenarios that might provide cost savings while maintaining critical service levels. Consolidation may provide a method for eliminating chronic operating deficits; economies of scale could be realized for small municipalities should they consolidate.

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