An Analysis of Municipal Financial Behavior Using the National League of Cities’ Typology

Abstract

Municipal finance research is an endeavor that requires the classification of cities for comparison purposes. Traditional methods of grouping cities have relied primarily on the form of government (mayor versus manager) or metropolitan status (central versus suburb) of the city. However, with changes in the governing structure and nature of cities, the continued validity of such classification methods has been called into question. The National League of Cities (NLC) recently developed a new typology that consists of six categories of cities: Spread cities; Gold coast cities; Metro centers; Meltingpot cities; Boomtowns; and Centervilles.

This dissertation uses the NLC typology to analyze the financial behavior of cities and to compare this classification method to other options, specifically classifications based on form of government, metropolitan status, and principal city status. The study focuses on demographic variables previously found to impact municipal financial behavior and several fiscal measures to compare the classification schemes and gauge the relative utility of each. The study tests seven hypotheses predicting significant differences between city types within the NLC typology and that the typology is a better means of classification. The analysis uses institutional, demographic, and financial data from the U.S. Bureau of the Census and the International City/County Management Association.

The findings of the study show there are statistically significant differences among the NLC typology categories for all financial measures analyzed based on analysis of variance and t-test methods. The results further confirm that the typology offers a method of classification that has greater explanatory power in predicting financial outputs among cities as shown through comparison of means and multiple-regression analysis.