A tale of four cities - models of state intervention in distressed localities fiscal affairs

Evidence suggests that distressed cities tend not to file for bankruptcy. Rather, to rehabilitate a city, its state usually creates a state supervisory board for the distressed locality, and the board, acting on behalf of the state, attempts to take the required measures for the city's recovery. Despite their importance to local fiscal health, however, research on state boards has been scarce. There has been precious little written on the creation of state boards and on the way the state's supervision should be structured. Through the case studies of four municipal crises, this Article begins the process of filling this gap. It provides a detailed account of state boards and, in particular, of the relationship between the state, the board, and the locality. The analysis offers several insights that can help states deal with local crises. It recommends a proactive oversight model for the state's involvement and explains the qualities boards should possess to help a distressed locality.