Fiscal stress, retrenchment and small cities: The financial management practices of ‘‘free standing’’ Iowa cities

Recent research indicates that cities with poor management practices are more likely to be experiencing fiscal stress. Consequently, the focus of this paper is to examine the financial management practices of 107 non-metropolitan communities that are said to be experiencing fiscal stress. The present analysis indicates certain community characteristics influence the ability of a community to adopt innovative financial management practices to avoid fiscal stress. Apparently, the larger, more wealthy and professionalized communities have a greater capacity to undertake and manage sophisticated financial management practices. In contrast, non-professional towns are shown to be less likely to adopt financial management practices, and are equally less likely to have the management capacity needed to alleviate fiscal stress.