Many Swedish municipalities are in crises. How does a municipality act in crises and how can this action be explained? That is the question this case study deals with in the sparsely populated municipality Berg in the county of Jämtland. The case study findings consist of about 40 interviews and other evidence. The findings were analysed in an iterative explanation building process. Seven different theoretic perspectives were used in the process. Leading theories in the field of policy analyses largely failed to explain the situation and acting. Through a new theoretic governance perspective the analyses went further to the field of democratic theory, which was more fruitful. The main problem emerged under the surface of the empiric findings. It consisted of two completely different views of what a municipality really is � a unit in public production of services or a way for people to locally and together try to realize what they regard as common good. The explanation was found in a conflict between real structural forces and actual conditions which results in a conflict oriented discourse and a non-action situation. The future holds two possible courses: A new period of creating fewer and larger municipalities´or a new road toward local participatory democracy.