To Fix Municipal Finances, States Need to Back Off

A great article just came out in Atlantic Cities this morning discussing the relationship between local control and state funding. Basicially, most western states (like Arizona) are restricted by law about what kinds of taxes they can impose and how they do it — i.e. new taxes must be approved by voters. When the recession hit, cities like Tucson saw their revenue plummet almost overnight, leaving the state as the main source of revenue (especially for things like HURF funds for road repair).

“The bottom line is that cities should be able to diversify their revenue sources in ways that they think are best, and that makes the most sense given the nature of their local economies. State lawmakers may feel that cities will do dumb things if they have too much leeway to tax and spend as they want, and some cities surely will make unwise decisions. Of course, those arguments ignore the fact that the electorate can always “throw the bums out.”

But to the extent that states continue to micromanage what municipalities can do, they aren’t just constraining city choices; they are limiting the ability of cities to do what’s needed to grow their economies, provide important services, and protect and improve the quality of life for local residents.”

Read the whole story here:

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