In the past year, a major factory closed in Parsons City. Following the closure, a number of residents moved from the town. Property values are falling and the mayor believes that a tax cut is...

In the past year, a major factory closed in Parsons City. Following the closure, a number of residents moved from the town. Property values are falling and the mayor believes that a tax cut is necessary to avoid further exodus. He believes that the high unemployment rate will result in a substantially increased demand for some public services. On the other hand, the declining population may reduce demand for other services. What budget approach would make the most sense for the city for the coming year? Why?