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Although public owned enterprises have rarely received the attention of the American public, their presence across the nation is widespread and their role in governance fundamental. These business-type activities, which are financed through user charges and fees, represent a great potential revenue source for municipalities as they often generate revenues beyond their costs. This paper examines longitudinally how public enterprises affect governmental spending and revenue patterns by analyzing a panel dataset of 100 Georgia cities between 2005 and 2009. This study used two-step GMM regression (2SGMM) and robust standard errors to estimate the relationship between dependent and independent variables. The findings of this research suggest that net enterprise transfers increase own-source revenues (additive effect) but decrease governmental expenditures (siphoning effect) contradicting findings from earlier studies.

This paper analyzes the impact of economic downturns on the revenue and expense sides of city financing for the period 2003 to 2009 using a convenience sample of the audited end of year financial reports for thirty midsized US cities. The analysis focuses on whether and how quickly and how extensively revenue and spending directions from past years are altered by recessions. A seven year series of Comprehensive Annual Financial Report (CAFR) data serves to explore whether citiesʼ revenues and spending, especially the traditional property tax and core functions such as public safety and infrastructure withstood the brief 2001 and the persistent 2007 recessions? The findings point to consumption (spending) over stability (revenue minus expense) for the recession of 2007, particularly in 2008 and 2009.