Revisiting the (lack of) association between objective and subjective measures of local fiscal condition

Recent fiscal condition literature has been attentive to the consistency between subjective measures of local fiscal condition based on public officials' perceptions and their objective counterparts measured using financial data. Studies have found little evidence of a relationship between them, leading scholars to speculate flaws in measurement or intentional lack of association. This study reevaluates the issue by investigating intervening explanations for the absence of connection. Analyzing survey and audited financial data from 185 municipalities across 31 states, we identify various individual and organizational attributes that help clarify the association between the two types of fiscal condition measures. This study holds significant importance in shedding light on the limited correlation found in previous research between local officials' perceptions of fiscal condition and fiscal condition ratios. This lack of association is bothersome, as it hampers our understanding of the mechanisms that produce actions by policymakers in response to their perceptions of fiscal condition. This study finds that individual and organizational attributes moderate the link between local officials' perceptions of fiscal condition and fiscal condition ratios. The results show that officials with longer tenure tend to forge a stronger tie between the two types of fiscal condition measures compared to their less experienced counterparts. Our findings spotlight the importance of understanding the dynamics of individual and organizational attributes in fiscal condition measurement. Beyond improving measurement accuracy, it is crucial to address how to encourage local officials with diverse backgrounds and in different contexts to appropriately utilize fiscal condition measures.