Life at the Bottom of the Fiscal Food Chain: Examining City and County Revenue Decisions

Any shifting of responsibilities from the state or federal governments to local governments would fall mostly on the shoulders of general-purpose governments, namely, cities (municipalities) and counties. This study explores city and county revenue decisions associated with general funds—the governmental fund most likely to be affected by state requirements for greater local financing responsibility for new or devolved programs. The results suggest that state control over local revenue authority affects decisions regarding the imposition of financial burdens on residents, and that intergovernmental aid to cities and counties does not necessarily mitigate those burdens. Despite evidence of healthy financial reserves, especially for cities, shifting responsibilities from the state to city or county governments could place cities and counties in difficult fiscal positions. Given the importance of own-source revenues to current budgets, and in view of the questionable impact of intergovernmental aid on city and county residents' revenue burdens, questions persist about the ability of city and county governments to maintain (and, if necessary, to expand) services during economic recession. Copyright , Oxford University Press.