What does receivership involve in municipal finance?

Receivership in municipal finance refers to the situation in which control of a distressed municipality’s financial affairs is taken over by the courts. This typically occurs when a municipality is unable to meet its financial obligations. In receivership, court-appointed officials, often referred to as receivers, are tasked with managing the municipality's financial operations. Their role includes overseeing budgets, reallocating resources, and potentially restructuring debts to restore financial stability. This legal framework aims to bring professional management to the municipality during a period of fiscal crisis to ensure that the municipality can meet its obligations to creditors and maintain essential services for its residents.

Other choices do not accurately depict receivership; for instance, delegating project authority to local government involves local autonomy rather than court involvement. Oversight by an independent financial advisor suggests advisory support without the legal authority of receivership. Establishing a financial management committee implies collaboration rather than the intervention typical of a receivership scenario.