Understanding financial success: an exploration of the determinants of fiscally healthy cities

Significant attention has been paid within the public budgeting and finance literature on the determinants of fiscal health and fiscal stress from the context of understanding unhealthy cities. A key assumption of this work is that healthy and unhealthy cities are similar, but what drives a city to be fiscally healthy may be very different than what causes a city to be fiscally stressed. Using a data set of the 150 largest cities in the United States from 1990 to 2017, we explore the factors behind what leads a city to be healthy. The results show that positive fiscal health is directly connected to a city’s ability to reduce expenditures or increase revenue rather than their ability to reduce debt or manage their cash. We also found strong demographic and geographic drivers behind healthy cities.