Local Governments Grapple With Financial Crises: Bowling Green Kentucky Case Study

Introduction

Crisis in most local governments and cities does not necessarily have to involve natural disasters. Local governments tend to grapple with a number of crises that often impact their operations and in particular, the service provision to residents. Bowling Green Kentucky, for instance, just like many American cities, has had a serious fiscal crisis over the past two years. Indeed, the United States' current financial crisis is not only a national problem but also a metropolitan issue, which has caught many local governments unprepared. Coping with the worst economic turndown in nearly a decade, Bowling Green Kentucky has been facing sizable budget shortfalls that continue to threaten the functioning of the local government, as well as the survival of the local residents.

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The United States and the Kentucky economies are intertwined, and both have continued along in an economic expansion for decades, however, with the current financial crisis in the country, Kentucky has experienced some of the worst financial trends in decades. In essence, given the national fiscal trend, the city of Bowling Green has had its fair share of challenges, and it is only just the beginning. Coupled with poor decisions and the sluggish pace of recovery, Bowling Green local government has tightened its budget and significantly cut spending which has imposed a serious drag on the city's economic performance. As a result, the city has experienced, over the years, increased property foreclosure, retrenchment in both public and private sectors, as well as declining consumption rates (Laris & Gascon, 2015). As a matter of fact, for many private institutions, the response to dwindling fiscal conditions in the city has consisted of what others refer to as unfortunate but inescapable service cutbacks and layoffs.

The climax of Bowling Green Kentucky's financial challenges has so far been witnessed in the wake of the COVID-19 pandemic. Ideally, compared with previous financial crises, the emergence and spread of COVID-19 disease have caused both health problems and economic meltdown, which has affected financial markets, businesses, and banks alike (The Economist, 2020). In fact, by now, many small and big business enterprises in the city have realized that the situation might sideline them for months, and will definitely lead to scant revenues over the period. Consequently, many of these firms have had trouble financing certain expenses such as wages, which are essential for the livelihood of their workers (The Economist, 2020). In addition, households, out of fear, have continued stocking up on essentials which in turn has put a strain on available cash.

Although the problem is ongoing, the best way to resolve this daunting crisis is to develop a partnership between all levels of the government to ease the financial strain on local governments and cities. In the wake of a financial crisis, city and suburban leaders may be unable to avoid severe measures such as major workforce reductions, service pull-backs, and retrenchment. Therefore, the federal government can assist local leaders by targeting fiscal assistance that can be used to stabilize the local budget and develop an employment program that hires positions required to mitigate the consequences of the economic crisis. Also in keeping with the spirit, the federal government can improve municipal credit to lower interest rates for bond issuers, thereby, availing ready capital for locally affected projects.

References

Laris, F. & Gascon, C. (2015). Bowling Green, Ky.: Cars, college, and caves. https://www.stlouisfed.org/~/media/publications/regional-economist/2015/july/metro_profile.pdf

The Economist. (2020, March 21). Why America's financial plumbing has seized up: Central-bank action is failing to stem the rout. https://www.economist.com/finance-and-economics/2020/03/21/why-americas-financial-plumbing-has-seized-up