Is There a Fiscal Crisis in Western European Local Government?

Abstract

Taking as a point of departure the recently discussed fiscal crisis of the state, the question of whether there is a similar crisis of local governments in industrial countries is addressed. The countries surveyed indicate that there is such a crisis in some countries but not in others. What comes out of a cross-national analysis of local governments is that fiscal strain emerges with the stagflation of 1973; that countries whose local governments have sources of revenue that are elastic with inflation (income tax) do not have a fiscal crisis; and those whose tax basis is inelastic, do.