Causes and exit strategies from municipal fiscal stress and bankruptcy: A taxonomy

The goal of this research is to create a taxonomy of the causes of municipal fiscal stress and fiscal crisis exit strategies to resolve fiscal issues. We comprehensively analyze six municipalities and one county in the United States that previously faced significant fiscal challenges. Specifically, we study fiscal distress situations in Colorado Springs, Colorado, and Matteson, Illinois; a fiscal emergency in Pittsburgh, Pennsylvania; and bankruptcies in Central Falls, Rhode Island, Detroit, Michigan; Vallejo, California, and Jefferson County, Alabama. We generate the taxonomy through an inductive, theory-building, multi-case study approach to shed light on causes of fiscal stress, stages of exit from fiscal emergency or bankruptcy, and consequences of fiscal stress for communities, economic development, and businesses. We discuss how fiscally struggling municipalities may exit fiscal stress situations quickly, effectively, and efficiently.