In this article we compare Cardiff and San Sebastián‐Donostia (Donostia) qualitatively, arguing that local governments’ capacity to co‐opt non‐state actors provides a relevant approach to understanding changes in citizen participation under fiscal austerity. Our argument is based on the close interrelationships of co‐optation, legitimacy and procedural regulation. These concepts help us understand how citizen participation is maintained in periods of instability, as experienced by city governments during and in the aftermath of the 2008 financial crisis. Local governments’ legitimacy is maintained in so far as it shows capacity to co‐opt through negotiation, capture, ‘technicalization’ of processes and minimization of conflict. These elements work in tandem with factors of urban austerity embedded into a longer‐term neoliberalizing discourse. Our findings show that both city governments maintained their legitimacy but that, in the process, Cardiff Council’s co‐optive capacity weakened, in contrast to Donostia’s.