Conceptualizing high local fiscal stress as a variable which includes low fiscal capacity, high local tax effort and high local need requires building a typology reflecting this conceptualization. This study builds such a typology for 166 counties in the northeastern United States and examines the effects of variables taken from a series of popular hypotheses regarding local fiscal stress. Findings show that the category with the largest effect on local fiscal stress is per capita expenditures for highways. Other causal factors include: high local demand for services (e.g. education, welfare); location (rural localities suffer from more local fiscal stress than metropolitan localities); high local needs (e.g. unemployment and crowded housing); and high centralization of formal political influence and authority. However, local fiscal stress is comparatively lower in manufacturing localities, and state intergovernmental revenue transfers to localities generally reduce inequalities in fiscal stress. Suggested policy implications to enhance distributive justice regarding local fiscal stress are that states should transfer more funds to highly stressed localities particularly for highways, but also for schooling and welfare. In addition, localities should try to create more accountability in their local budgeting process rather than to concentrate power in the hands of their elected officials. (JMM)