35 1984; Behn 1985; Berne and Stiefel 1993; Dougherty and Klase 2009 and 3
government responses are mostly unstructured due to ambiguous goals and ill-defined preferences Pammer 1990; Downs and Rocke 1984; Bartle 1996. Based on the
predictions of how localities react in periods of fiscal stress and given various organizational characteristics, Bartle 1996 tests these frameworks against practices in
cities in New York. His findings support an unstructured framework, finding that government responses to fiscal stress are varied and dependent upon government-specific
factors. Research applying cutback management theory to the state level supports cutback
management theory, but is relatively sparse. In examinations of Florida and Georgia, researchers found tactics to resist and delay mainly in Florida and to smooth changes
mainly in Georgia with relatively few instances of major programmatic shifts or eliminations Willoughby and Lauth 2003; Grizzle and Trogen 1994. Other research
focusing on personnel actions point to many of the unintended consequences of hiring, pay and promotion freezes Druker and Robinson 1993; Greenhalgh and McKersie 1980.
In an effort to apply the cutback management model to states, Dougherty and Klase 2009 assessed the responses of eight states to budget deficits between 2002 and 2005.
They found that the pattern of responses largely followed that predicted by Levine et al 1981a. States initially used across-the-board cuts and hiring freezes; however, as
deficits increased or fiscal stress persisted they tended to use targeted cuts. In a few cases, as a response to severe and prolonged budget deficits, states laid off employees and
eliminated programs.
2.4.3 Theoretical Implications for State Responses to Fiscal Stress
Cutback management theory provides a relatively comprehensive description of how states will act under fiscal stress. The type of responses—across-the-board cuts,
hiring freezes, targeted cuts, tax increases, or layoffs—will differ depending on the
36 severity of fiscal stress as well as the persistence of fiscal stress. Cutback management
theory is also helpful in determining the temporal order of administrative responses to fiscal stress. The theory posits that fiscal stress, in the form of revenue declines,
determines the extent of the administrative response. Since the measure of fiscal stress developed in this paper encompasses long-term and service level solvency along with the
more directly relevant to cutback management theory budgetary and cash solvency, we expect to see different relationships between responses and these types of solvencies. It
also suggests that we should not expect to see an effect on fiscal stress levels by administrative responses within the same fiscal year. Rather it is more likely that
administrative responses in the previous fiscal year have an impact on the current year’s fiscal stress level. The theory also offers reasons why certain responses – layoffs, for
instance – may be less effective at improving the fiscal situation than anticipated by decision-makers.
2.4.4 Criticism and Limitations of Theory
Cutback management theory applies organizational change to resource- constrained environments, directly relevant to our current investigation. An element that
is missing from the theory is direct application of theories of budgetary decision-making to explain why decision- makers use specific tactics. Perhaps the limitation most relevant
to this analysis is the lack of discussion or empirical testing of the effectiveness of strategies in alleviating and preventing fiscal stress Levine 1979; Scorsone and
Plerhoples 2010. Another criticism of the theory, although not unique to this theory, is that several
researchers have not found the pattern of predicted responses or a difference in responses based on the severity of fiscal stress, as mentioned Pammer 1990; Bartle 1996. Indeed,
relatively little research attempts to apply the cutback management framework to a cross section of governments, at the state or local levels. While this is a limitation of the theory,
37 it is also a reason to explore the theory further and see where its merits and weaknesses
lie.
2.5 Assessing Effectiveness
