- Consulting Editors
- Introduction: State and Local Government Finance in The United States
- The Constitutional Frameworks of State and Local Government Finance
- Federalism Trends, Tensions, and Outlook
- State and Local Government Finance: Why It Matters
- State and Local Governments and The National Economy
- The Evolving Financial Architecture of State And Local Governments
- Profiles of Local Government Finance
- Federal Preemption of Revenue Autonomy
- State Intergovernmental Grant Programs
- State and Local Fiscal Institutions in Recession and Recovery
- Real Property Tax
- State Personal Income Taxes
- State Corporate Income Taxes
- Entity Taxation of Business Enterprises
- Implications Of a Federal Value-Added Tax for State and Local Governments
- Retail Sales and use Taxation
- Local Revenue Diversification: User Charges, Sales Taxes, and Income Taxes
- State Tax Administration: Seven Problems in Search of a Solution
- Revenue Estimation
- Providing and Financing K–12 Education
- The Social Safety Net, Health Care, and the Great Recession
- Transportation Finance
- Housing Policy: The Evolving Subnational Role
- Capital Budgeting and Spending
- Financial Markets and State and Local Governments
- Infrastructure Privatization in The New Millennium
- Financial Emergencies: Default and Bankruptcy
- Government Financial-Reporting Standards: Reviewing the Past and Present, Anticipating the Future
- Pullback Management: State Budgeting Under Fiscal Stress
- Public Employee Pensions and Investments
- Accomplishing State Budget Policy and Process Reforms
- Fiscal Austerity and the Future of Federalism
- Achieving Fiscal Sustainability for State and Local Governments
- The Intergovernmental Grant System
- Community Associations at Middle Age: Considering the Options
Abstract and Keywords
This article lays out the economists' view of why state and local government matters. To establish the economic framework, the article systematically works through the seminal contributions of Paul Samuelson's theoretical arguments of the importance of a public-sector role for efficiency in resource allocation; Charles Tiebout's thinking on the difference between national and local public goods; Richard Musgrave's classification of the fiscal “branches” of a decentralized federalist system; and Wallace Oates's Decentralization Theorem. It is from this platform that the article proceeds to address three fundamental fiscal policy issues for a multigovernmental society (e.g., US fiscal federalism): the sorting out of expenditure responsibilities among different types of governments (“expenditure assignment”); the question of which type of government should use which type of revenue (“revenue assignment”), and what happens when, for many state and local governments, the costs of the allocation of expenditure responsibilities are greater than that which can be financed from their “own” state/local revenues (the role of “intergovernmental transfers”).
Serdar Yilmaz is a Senior Economist at The World Bank.
François Vaillancourt is a Fellow at CIRANO and Professeur Honoraire at the University of Montréal.
Bernard Dafflon is a Professor of Public Finance and Policies in the Department of Political Economy at the University of Fribourg in Switzerland.
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