User Charges, Contracting Out, and Privatization in an Era of Fiscal Retrenchment

摘要

The fiscal limitation movement, aggravated by other trends in local and intergovernmental finance, appears to be hastening an era of fiscal retrenchment. Local government will search for ways to reduce government costs and to raise revenues not subject to fiscal controls. User charges, contracting out and privatization are obvious remedies. The advantages of these market-oriented mechanisms on the efficiency front, however, must be balanced against the inequities they may create. Certain adjustments in the application of the mechanisms can reduce the adverse distributional consequences.