RATIONALIZING THE LOCAL GOVERNMENT DECISION-MAKING PROCESS A Model for State Oversight of Local Government Finances

State prediction of local government fiscal stress has become very subjective with limited results. Not only have the mechanisms been limited in performance, but no effort has been undertaken to increase the involvement of local government officials in determining the fiscal stability within their own units using comparative data. This paper explores the use of state-sponsored fiscal indicators to predict local government solvency among rural North Carolina counties with similar governmental capacity. With increased information regarding the plight of their unit's financial stability, commissioners look to other counties as well as state directives to become more involved in the budget formulation process and remain fiscally stable.