In the face of well publicized urban problems in the North--riots and fiscal disparities in the 196Os and capital obsolescence and big city bankruptcies in the 197Os--the financial position and prospects of southern cities has not been paid much national attention. The Carter Administration's urban policy statement made a bow in the direction of being national, but it did not really reflect an understanding of the different forces that affect the budgetary position of northern and southern cities. In our federal system, which is supposed to have the virtue of being responsive to the varying needs and situations of different regions, an essential ingredient of good public policy is a recognition of these different forces. One goal in this paper is to describe more clearly the different setting in which northern and southern cities typically operate and to suggest what this might mean for national policy.

A second purpose for this paper is to suggest what the changing national economy may mean for state and local governments in the urban south, and economy may mean for state and local governments in the urban south, and how southern governments might cope with these changes so as to avoid some of the serious fiscal problems that have plagued large cities in other regions.