Current Members of theAdvisory CommissionOn Intergovernmental Relations

(September 5, 1987)

Prlvata Cltlzens

James S. Dtight, Jr., Arlington, Vir&”niaDaniel J. Elazar, Philadelphia,

PennsylvaniaRobert B. Hawkins, Jr., Chsirma,

Sacramento, California

Members of the Unltad Stataa Senate

David Durenberger, MinwsotaW:lliam V. Roth, Jr., DelawareJames R. Sasser, Tennessee

~~Msmbers of theU.S. House of Representstlves

Sander Levin, MichiganJim Ross Lightfoot, IowaTed Weiss, New York

Offlcera of the Executive erench,Federsl Government

William E. Brock, III, Secretary,U.S. Department ofLabor

Gwendolyn S. King, Dep@ Assistantto the President, Director ofIntergouemmentnl Relntions

Edwin Meese, III, Attorney GsrLsrat

Governors

John Ashcroft, MissotiTed Schwinden, MontunaJohn H. Sununu, Vice Chairman,

New HampshireVacanq

Meyers

Donald M. Fraser, MinneapolisMinnesota

William H. Hudnut, III, Indianapolk,Indiau

Robert M. Isaac, Colorado Surings,Colorado

Henry M. Maier, Milwaukee, Wisconsin

Members of State Legielaturea

John T. Bragg, Dep@ Speaker, TennesseeHouse of Representatives

RQSS0. Doyen, Kansas SenateDavid E. Nething, M~’orio hader,

North Dakota Senate

Elacted County Officials

Gilbert Barrett, Dougher& County, Gsor&”a,Comty Commission

Phllip B. Elfstrom, Kane County, Illinois,CO* Commission

Sandra R. Smoley, Sacramento County,Califom”a, Doard of Superetiors

staff

John ShannonExecutive Director andKestnbaum Fellow

John RincaidResearch Director

Robert GleasonDirector of Communicationsand Publications

Joan A. CaseyEditor

Cover DesiW Baskin and Associates

IntergovernmentalPerspective(ISSN 0362-8507) is publishedfour times a year by theU.S. Advisory Commissionon Intergovernmental Relations,Washington, DC 20575202-65>5540

ln~~b[ Su.rner/FaO 1987, “cd. 13, No. 3/4.

4 ACIR News

6 Intergovernmental FocusSpotlight on the Florida AdvisoryCouncil on Intergovernmental Relations

10 State-Local Relations and

Constitutional LawRichard Briffault

15 Local Governments in State Coutis:A New Chapter in Constitutional Law?Michael E. Libonah

20 Local Public Economies:Provision, Production and GovernanceRonald J. Oakerson

26 State-Local Panels: An-OverviewMichael Tetelman

32 A Special Report:Financing the Nation’s Highways

34 A Fiscal Note:The Return to Fend-for-Yowself Federalism:The Reagan Mark

Be And Briefly: Books

The Chairman of the Advisoq Commission on Inter-governmentalRelation. ha. determinedthat thepub-licationof this periodical is necessary in the transac-tion of the public business required by law of thisCommission. Use of funds for printing this do.umrnthas been approved by the Director of the Office ofManagement and Budget.

Commission Approves NewResearch Agenda

At the June 1987 quarterly meet.ing, the members of the AdvisoryCommission on IntergovernmentiRelations manimously approved anew research program and agenda tobe implemented over the next threeyears. The commission is now com-pleting the work on its currentagenda, and will issue a number ofpolicy and information reports in thenext few months (six have been re-leased since the spring),

The new research agenda wasprepared mder the direction of acommittee chaired by CommissionerDaniel J. Elazar. Numerous ideas andcomments were submitted by theCommissioners, staff members, andinterested persons and organizationsin and outside of government-in-deed, the most painfd part of plan-ning the agenda waa selecting fromamong the may good projects. Thebreadth and depth of ideaa clearly in-dicated that the Commission can andshodd continue to play a vital role inhelping to shape Ameri~ federal-ism and intergovernmental relations.

In an era of “doing more withless,” the Commission has sought to

O,Wlze Its resemch and infnma.tlon program to ensure that solid re-search on vital fedemlism issues canbe advanced while information serv-ices historically protided by theACIR me not interrupted. In addi-tion, one of the realities faced by theCommission is the need to charge forits publications and services.

The resewch and informationprogram has been organized alongthree lines: continual monitoring andinformation dissemination, com-puter data services and topical re-search projects.

Monitoring and InformationDlaaemlnatlon

One very important fwction ofthe Commission is monitoring thefederal system and intergovernme-ntal relations, particularly throughdata collection and dissemination. Inthis mm, the Commission will con-tinue to publish the following

Significant Features of Fiscal Feder-alism

Fkcal Capaci&and Tox Effort of theStates

Chan@”ng Public Attitudes on Gou-emment and Toxes

Catalog of Federal Grant-in-AidPrograms to State and healGovernments

Intergovernmental PerspectiveThe Commission will also experi-

ment with tbe following as regularmonitoring publications:

Chan@”ng Views of Public Oficialson Federalism and In-tergovernmental Relations (to

complement the annual publicnpinion survey)

heal Revenue Sources and TheirUses

FederalismlIGR Digest (an occa-sional report on current issues)

Microcomputer Data Servlcea

Since 1985 the staff has been de-veloping diskettes designed to makedata more useful and accessible tothe users of the publications de-scribed above. Three major se-ries—State-bcal ad City-Coun&Finance, and State Fiscal Capacity–have proven very popular. A fourthseries on State Gouernrrzent TaxRevenue FY1983-86 has just been re-

leased, These will be updated regu.Iarly.

Also being developed are a newheal Government Datn Banh and aPublic Opinion Poll Data Bank.

Topical Research

The Commission will udertakeresearch on the following topics,listed in an approximate order of pri-ority

State-Local Relations in HighwayPlanning, Financing and Con.struction

Fedeml and State Compliance withNational Mandates and Sti-dards Does the Federal Gover-nmentPractice What It Preaches?Access for the Handicapped and/or Environmental Standards

The Federal Union in tbe Interna-tional System: State and LocalResponses to International Eco-nomic and Political Challenges

Inte~m’isdictional Tax Policy andCompetition: Good or Bad forthe Federal System? (also in-cludes research on competitiveincentives for business)

The Congress, the States and Feder-alism

How Local Public Ecnnomies WorkEquity, Viability and Service Re-sponsiveness in America’s CivilCommunities (also includes re-search on equity, fiscal dispari.ties, small-govemment viabilityand boundary review commis-sions)

A Decade of Change, 1978-1988 TheEmergence of a New Fedemlism?

State Law in the Federal System:Shaping a New Judicial Federal-ism

Tbe Role of the National Guard inProtecting the Nation ud theStates: Issues and Options

4 Itiergovemmental Perspective/Sumnmr-Fall 19S7

New JerseyConstitution Conference

On November 5, RutgersUniversity-Camden and theNew Jersey League of WomenVoters will cosponsor a confer-ence to celebrate the Bicenten-nial of the U.S. Constitution andthe 40th anniversary of theadoption of the 1947 New JerseyConstitution. The conferencewill be held in the State Museumin Trenton, and participants willexamine the development of the1947 constitution and its impacton tbe state’s recent politicalhistory. (For f~her informa-tion, contact Professor AlanTarr, Department of PoliticalScience, Rutgem University,Camden, New Jersey 08102,(609) 757-60S4.)

State and Local T-tion and Re@a-tion of Interlocal and Inter~tateService Businesses: Ftirness andEqaity in a Complex PoliticalEconomy

Reconsidering Theories of Federal-ism Cooperative Federalism,Redistributive Federalism, Con-gestion and Sorting Out

Immigration and Federalism: Costs,Civil Liberties and Intergovern-mental Tensions

Water Management in the FedetiSystem Competition, Coordina-tion and Coopemtion

State Court Recognition of LocalAutonomy Can Local Govern-ments Find Relief in Their Statecourts?

Federalist Approaches to DemocraWand Economic DevelopmentAbroad: Does American ForeignPolicy Preach What AmericansTry to Practice?

Antitrust Policy in the Federal Sys-tem

State-Locul Revenue Sharing andState A]d to Cities and Counties

Prisoner Litigation in the FedemlCourts: Is There a State Solu-tion?

Pending funding and staff re-sources, research may be undertakenon the following topics

Coordinating Governments in theFederal System for EffectiveDru&Abuse Law Enforcement

Stewardship, Property Rights and In-tergovernmental Influence onLand Use

Statetide Information and Data Net-warks

State Assumption of Local Fanctions

Use of Major State-Local Tax Bases:Implications for the Size of thePublic Sector, Tax Rates and theIncidence of Tu Burden

State Business Climates Measure-ment and Efficacy

The Diffusion of Information and In.novation among the States andTheir Localities: Federalismwithout Washington?

F]nally, to help expedite re-search, explore the feasibility ofstudying certain topics, promote in-terest by other organizations, orbring together the relevant parties toan issue to promote mutual under-standing and cooperation, the ACIRpkms to conduct one-day confer-ences on such topics as the following

State-Local Relations: A Reconnais-sance

Residential Community Associa-tions: Partners or Renegades?

When State and Local GovernmentsServe as “Robin Hoods”

Intergovernmental Approaches toWork Force Preparation

The Status of School Financing Ar-rangements in the States: Effi-ciency, Effectiveness and Equity

Federal Grant Fomulas: MatchingVariables and Structures to Ob-jectives

Assisting the Homeless: Can theStates Make Effective Legisla-tive Responses?

Benefit Captare and the Financing ofLocal Government A ChangedPhilosophy or Old Wine in NewBottles?

As the nation celebrates the Bi-centennial of the United States Con-stitution, the Commission looks for-ward to being actively involved in theissues and debates that will shape thethird century of American federal-ism. Persons wishing to contributeideas or resources for items on theACIR research agenda are welcometo contact John Kincaid, Director ofResearch.

BYTHECON:;;~ION

UNITEDSTATES.

THECONSTITUTION

The\vor& \ve live ~

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Intergovernmental Perspective/Summer-Fall 1987 5

on the Florida ACIR

The statutory premise for theFlorida Advisory Council on In-tergovernmental Relations (ACIR) isquite simple “The primary role of theCo~cil shall be to study the relation-SKIPSbetween state and local gover-nment.” The Executive OffIce of theGovernor haa primary responsibilityfor federal-state relationships. Flor-ida statutes are largely silent on thematter.

In a sense, this design is curious.The Florida ACIR was craated tenyears ago, near the high-wster markof fisd federalism. Federal grants-in-aid as a percentage of total federaloutlays and of gross national productwere appreachlng historic highs. Re-liance by Florida’s cities and countieson fedeml funds had reached recordlevels. By many measures, fedeml ac-tions were of singular consequencefor Florida’s state and local gover-nments. Yet, in the creation of theFlorida ACIR, it was tie less dra-matic but more intricate constitu-tional, statutory and administrativerelationships between state and locafgovernment that galvanized statepolieym~ers.

By the seventies, Florida’s law-makers were acutely aware of the sig-nificance of state-local relations.Forty years of sustained poptiationgrowth had altered the traditionalmethods of handling issues and re-solving disputes. In 1940, fewer thana million people lived in Florida. Thestate’s popdation nearly doubled inthe ffiies, and then it doubled anddoubled again, bringing with it a setof problems and a complexity largelybeyond the compass of existing po-

litical and administrative arrange-ments.

Popular ratification of the re-vised stite constitution in 1968 wasperhaps the first, most pafpable re-sponse to the changing circumstanceof the state and its local governmentsin the post-war era. The 1968 consti-tution dramatically altered the roleof counties and municipalities. It pro-vided one of the strongest home mlestatements in the nation. But theconstitution did not resolve mattersfully. It allowed for considemble in-terpretation, required extensive im-plementing language and ignoredsome signiticsnt issues.

The Commission on Local Gov-ernment was created by the Legisla-ture in 1972 to examine state-localrelations in light of the changeswrought by the revised constitution.The commission was to examine theoperation and organization of localgovernments in detail and to recom-mend necess~ changes in state pol-icy.

The commission was an enor-mous success. Under the guidance ofJohn DeGrove, it published a numberof influential reports on matters asdiverse as financial reporting, mu-nicipal home rule and special dis-tricts. Its recommendations resdtedin a substantial revision of the ststestatutes affecting annexation proce-dures, municipal incorpomtion, staterevenue sharing, local budgeting pro-cedures, local management capacityand jurisdictional dispute resolution.By the time the commission com-pleted its work in 1974, the value of aformal body within state government

Robert B. BradleyExecutive Director

devoted to consideration of state-locaf relations had been establishedin the minds of many.

The Florida ACIR can properlybe considered the successor to theCommission on Local Government.Its ptiew and organization aresimilm. But the creation of an ACIRalso shoufd be seen as m indica-tion of the persistent, perennial na-ture of problems between state andlocaf government. Florida’s ACIRwas established in pti because boththe 1968 constitution and the Com-mission on Locaf Government hadnot settled a range of issues. Homerde did not prove to be the panaceasome had thought. Relations betweencities and counties were not arm,ngedto everyone’s continuing satisfac-tion.

The Florida ACIR held its initiaJorganizational meeting on August 19,1977, with Representative Carl Og-den as chairman. Before it lay time-worn issues. Its enabling legislationdirected the Council to give careftistudy to the pressing issue of doubletaxation between cities and counties,to identify state mandates on localgovernments and to recommendrevenues that might pay for them,and to prepare analyses for the Con-stitutional Revision Commission onthe impact of the state @ structureon intergovernmental relations. Tenyears later, these same issues, albeitin different guises, still face theComcil. W,th the ACIR, though, thestate has a formal mechanism withinthe Legislature to address such is-sues.

6 Intergovernmental PersF.sotive/Summer-Fdl 19s7

Organlzatlon

The Florida ACIR has 17 votingmembem and four ex-officio mem-bers. Four senators are appointed bythe President of the Senate, four rewresentatives by the Speaker of theHouse, and the remaining membersby the Governor. The terms of thelegislative members run concw-rently with their legislative terns. Bylaw, the chaimmn and vice chairmanmust be membem of the Legislature,and by agreement between the twochambers, the offices rotate annuallybetween the House and Senate. Un-der the state constitution, the Flor-ida ACIR is considered part of theLegislature, where it is treated ad-ministratively as a j oint committee.

The Governor appoints a major-ity of the Council membership. His-torically, most gubernatorial aypointees have been drawn from cityand comty gevemments. Though itis not required by the statute, theGovernor typically has appointedeqti numbers of membem repre-senting cities and comties. Localgevemment offlcids have been ap-pointed without regard to political af-filiation. These include elected andadministmtive off]cials. However,membem of the Governor’s sW,heads of state departments and dis-tinguished private citizens afso havebeen asked tn serve. Gubernatorialappointees serve four-year terns. Inaddition, the executive directors ofthe Florida League of Cities, FloridaAssociation of Counties, FloridaSchool Board Association and theFlorida Association of School Admin-istrators are members of the Councilex officio.

The Council is funded through aYWIY legislative appropriation, andit may seek grants from othersouces. In fact, the ACIR did usegrant money to conduct an investiga-tion into various aapects of cOmmu-nity preservation dting 1979 and1980. However, the Council typicallyhas relied solely on state appropria-tions for support of its activities.

The Council employs a staff ofseven ftil-time analysts. The Com-cil, by majority vote, hires the execu-

tive director, who has authority toemploy and remove additional stafT,within available funds and consonantwith the personnel policies of theJoint Legislative Management Com-mittee. At present, afl staff membersare social and economic researchers.The Council cumently does not em-ploy an attorney, although several ofthe members are attorneys.

Activities

The Florida ACIR serves as a fo-rum for the study and discussion ofintergovernmental problems. berthe YWS, the Coucil hm investi-gated a wide mnge of topics. Becausemany intergovernmen~ problemsinvolve financial matters, however,the Comcil has concentmted muchof its research on fiscal issues. Al-though the ACIR is a joint legislativeagency, and meets several times aysar, it does not enjoy the full rangaof powers granted standing commit-tees of each house, For example, itmay not issue subpoenas, find forcontempt, or introduce committeebills. Instead, the Council has fiveother functions.

First, the ACIR undertakes long-term research at tbe request of otherlegislative committees or the Gover-nor, or on its own initiative. Since theACIR does not handle committeebills, its activities are not tied as di-rectly to legislative sessions as areother committees, This allows theCouncil to tackle research problemswhich require a lengthy commit-ment, often a yea of staff time. Thus,the Council m“ explore policy issuesin considerable detail, conduct publicbea.rin~, and provide for the sort ofsustained deliberation not akvaysavailable to other legislative commit-tees. The ACIR has published a num-ber of reports on various subjects af-ter such studies, including propertytax assessment and exemptions, dou-ble taxation, local government retire-ment systems, the use of fiscal indica-tom, federal block grants, municipalannexation, initiative and referenda,and impact fees. In all, the Councilhas published 63 reports.

The second major function of theACIR is to serve as a resource for the

Legislature and the Governor onmatters affecting state-local rela-tions. Here the Council benefits fromthe diverse character of its member-ship and the expertise developed bythe staff in the course of its research.Thus, the Comcil has been asked toaddress various issues for review andrecommendation, often with an eyetowd immediate legislative action.Mso, the staff frequently is asked byother legislative committees to ana-lyze bills, prepare fiscal impact state-ments (especially for local govern-ment bills), ad to give testimony be-fore the legislature. During the 1987legislative session, for example, theSW provided assistice on mattersrelated to local government sover-eign immunity, initiative and refer-enda, special assessments, indigentcare, stite shined revenue formulasand local bonded indebtedness. In ad-dition, the staff responds to requestsfor information from legislators.These involve the sti in matters asdiverse as water management dis-tricts, cspital budgeting and munici-pal mergers.

The third function of the FloridaACIR is to act as a resource for city,county and special district gover-nmentson matters in which the stsffhas developed expertise. In this rule,the Council frequently provides in-formation to local officials and theirconsultants petining to state-localfinacial matters, administration ofstate laws and governmental organi-zation. The staff makes a number ofpresentations before Iocd groups andhandles written requests throughoutthe year. The Council also annuallyprepares three publications of inter-est to local officials: the G@slatiueMandates Report, an Estimate ofCounty C0ns6t&0nal Oficers’Sala-ties, and a Local Government Finan-cial Handbook.

The Council is required to reportannually to the Governor and thepresiding officers of the Legislatureon the impact of state mandates im-posed on municipalities and counties.In Florida, mmdates are defined asthose stite actions that impose costson local government through an ero-

Intergovernmenhl Perspective/Summer-Fall 1987 7

sion of the & base, or through a re-quirement to perform an activity orprovide a service or facility. Simplystated, they are actions which eitherlimit or place requirements on localgovernment without making com-pensating changes in fiscal resources.The annual mandates report is de-signed to meet the charge of the stat-utes by listing, analyzing and report-ing on legislative acts containingmandates. Because of limited re-sources, the Coucil does not at-tempt to monitor administrativemandates.

Although the primary pqose ofthe report is to identify legislativemandates, it also contains informa-tion on actions which repeal oramend existing mandates or increasethe revenue or revenue-gsneratirrgcapacity of local government sincethese items offset, to some extent,the fiscal impact of new mandates.The report also includes informationon non-reting appropriations gO-ing directly to 10A government. Inrecent years, the report also h=given state and locaf officials an his-toric perspective on the enactment ofmandates.

In Florida, the ties of sevencounty officers (clerks of the circuitcoti, comptrollers, commissioners,property appraisem, sheriffs, super-visors of elections and w collectors)and two county school board districtofficers (district school board mem-bers and superintendents) are estab-lished by state law through a ratherinvolved process. Afthough not re-quired to do so by law, the ACIR per-forms the annual recomputation ofannual salaries in order to assist localoff]cials. It provides an estimate ofsalaries early in each government’sbudget cycle, and issues a final state-ment later in the year when completeinformation is available.

In coopemtion with the state De-partment of Revenue and the Eco-nomic and Demographic ResearchDivision of the Joint Legislative Man-agement Committee, the ACIR alsoprepares a local governmental finan-cial handbook. The handbook is de-signed to assist comties and muuici.

palities in their financial planning lJymaking available state revenue andeconomic forecasts as they pertain tomajor state shared revenue sowcesand state-administered local optiontaxes. The handbook draws on the of-ticial state estimates to provide infor-mation on nearly a dozen programsfor over 460 local governments. Italso includes population estimatesand projections, and a forecast of avariety of price indices which maybehelpful when compiling local budgets.

The fotih major fuuction of theACIR is to provide a forum for discus-sion of intergovernmental policy is-sues. Typically, such discussions arenot meant to produce immediate so-lutions to intergovernmenti prob-lems, since many involve 10ng-standlng and particdarly intractableissues. Instead, their p~ose is to be-gin a dialogue which may ultimatelylead to new approaches to persistentintergovernmental conflicts. Overthe put year, for example, the ACIRhas initiated a discussion of the statetrial coti system, focusing on the re-sponsibilities of different levels ofgovernment. This is part of a largerCoimcil discussion of local fuctionalresponsibility and the sorting out ofservice roles that has gune on forsome time.

The fifth fmction of the ACIR isto maintain and make available ti-nancial and demogmpbic informa-tion about mmricipalities, countiesand special districts for use in policydevelopment and research. TheCouucil maintains an extensive com-puterized data base tith detailedrevenue aud expenditme informa-tion on every local government. Thedati base ~so includes a protile ofevery outstanding local bond issue inthe state, as well as demogmphic re-cords for most cities and couties. Aportion of the data base is main-tained through the coopem.tive ef-forts of the Division of Bond Finaucein the Department of General Serv-ices, the Bweau of Lod Govern-ment Finauce in the Department ofBanking and Finance, and the OffIceof Plarming and Budgeting in the Of-fice of the Governor. Information

about current fiscal year activity isobtained directly from cities andcounties and is processed by ACIRsW. Information from the data baseis available to the public and is di-rectly accessible to legislative aud ex-ecutive staff through the Legisla-ture’s data center.

Operation

The work of the Council pro-ceeds on several levels. Much of itnecessarily involves the staff, whichprovides extensive reports, back-ground reports, briefing documents,fiscal analyses and dtit legislation.By and large, the staff is deployed towork on specific projects commis-sioned by the Councfl. In addition, asnoted earlier, the ACIR works on anumber of regular and recurrent ac-tivities. Here, @n, the staff is cm-cial. But the real work of the ACIR isaccomplished by the membership.

By law, the Couucil must meetsemi-mmually, in fact, it meets morefrequently. The fufl Co~cil con-vened five times over the 1988-87working year. Meetings of the fullCouncil are often schedded in con-cert with regular legislative commit-tee meetings in the capital. However,the ACIRattempts to meet at tioussites throughout the state each year,often using subcommittees to focusattention on an issue and to gatherinformation.

The subcommittee on special dis-trict accountability is a case in point.During the 1986-87 working year, itmet seven times. Hearings were heldin Tallahassee, Orlando, Tampa andWest Palm Beach. The subcommitteebe~ its round of hearinm after re-viewing an extensive staff report. Thehearings were designed to focus ondiff]cdties in various issues areasidentified in the report, They pro-vided the backdrop for comprehen.sive recommendations affecting tenpolicy mess: state assistance to spe-cial districts, coordination amongagencies, state overnight procedures,definitional issues and formationprocedures, bond issuance, financialemer~ncies, special msessments

8 Intafgovemmen@ Persxw/Summer-Fdl 19S7

collection, district electiOns, bu{lget- tional license fees have been debated members participate most.ary hearin~ ad governing pmctices. within the fdl Council, guided by The Florida ACIR celebrates its

Subcommittees have been em- staff papers, under the chairman’s di- tenth anniversary this year. Tenployed by the Coancil to study a nm-ber of thorny issues; most recentlythey have examined shined revenues,considered local infrastmctwe prob.lems and taken testimony on stateannexation policy. Most issues areconsidered without the henetit ofsubcommittees, however. The exper-tise and knowledge of the member-ship is stilciently broad to handlemost issues in full Council, Thus, top-ics such as impact fees, local govern-ment liability insurance and occupa-

rection.In the long run, of course, it w the

Council members who must sustainits recommendations. The FloridaACIR is only advisory. It does not in-troduce legislation. It does not writerules. It commands only the author-ity vested in it as a credible source ofinformation and a fruitful discussionforum. Its legislative members carrytbe Council’s recommendations tothe Legislature, but only by acces-sion. Tbe Council works best when its

years have altered the chmcter offederalism, and perspectives havechanged. Certainly, the Florida ACIRexists in part to ensure that the les.sons of tbe decade me not forgottenand to explore new approaches to oldproblems. Yet, the Council continuesto serve its original intent. By customand design, the Florida ACIR is pri-marily concerned with stite-local re-lations, and it continues to bringstate and local officials together toconsider mutuaf problems.

Florida ACIR Membership

To~TobWn, State Repraeen- Barbara Toti, P1nellas Cowty William G. Mysrs,tative, @@ez (Chtim) Commissioner, Clmnvater M.D., Senator, Stusrt

kwrimce Plu7nmer, State Beoa-Charles L. Nergd, Repre-

tor, South Mimni ~lce Chair- Citizen Members sentative, Port St. Lucie

man) T. Wa~ Sai@, Chairman, De- Marlsnc Woo&on, Senator,

City Officialspartment of Politicaf Science, BradentonStefion university, Deland

Pad S. Buchman, City Attor-Ex-Officio Members

Joh M. DeGrove, Director,ney, Plant City FAU-FIU Joint Centm’ t’or Envi- Wayns Biatin, Executive

J&~YRWrS~ Mayor, mnmental and Urban Problams, Director, School Board As-

Fort Lauderdale sociation of Florida, Tal-lahassee

Howard ~tin, City M-r, Tom Lewk, Director, Disney De-

D@ons Beach wloprnent Company, LskeRaymati Stitig, Executive

Buena Vista Director, Florida League ofG1ties, Tatlahasses

St*e OkeidsW Rabsrtean,Dlr*r,

State tigislative Member6 * Spti, Executive DI-

Mv-or’s Oftice of PbmningCarol G. Hamon, Representa- rector, Florida Association

tive, Boca F&ton of Cnunty Commissioners,and Bad@t, Tallahassee Taflshaeses

EversttA. Kslly, Representa-

*mty Offkoiels tive, Tevaras John @e, Executive Di-

Janws Miti St. Lucie Cotity Jearms Malehan, Senator,rector, Association of FlOr-ids School Administrators,

Commissimer, Fo~ MYSI’S St. Petersbq Tallahassee

Intergovernmental Perspective/Summer-Fall 1987 9

State-LocalRelations

andConstitutional

Law

Richard Briffatit

A persistent theme in the literatureon state-local relations has been the ple-nary power of state governments and thelegal powerlessness of local govern-ments. The “black letter” rules of state-local relations are that the state govern-ments enjoy complete hegemony overtheir political subdivisions, that localgovernments are mere “creatures” ofthe states, with only those powers thatthe states delegate to them, and there isno such thing as an “inherent right” oflocal self-government.

10 lnbqlc4ammenM Psfc@e/Summer-Fall 1987

This notion of plenary state power/inherent localpowerlessness significantly understates the degree towhich state courts have supported the concept of locafcontrol, and, as a resuft, it also misses the substantialamount of real power enjoyed by many loml gover-nmentsin most states. The force of the loml control ideain state jurisprudence has been dramatically under.scored by the consequences of two mq”or law reform in-itiatives dting the last two decades-the challenges tothe local property * based system of finding publicschools and to suburban exclusion~ zoning.

The school finance and exclusiomuy zoning litiga.tions are of central significance in understanding thestructure of contemporary state- locaJ relations. Theyconcerned the most important service provided by Iomlgovernments and the principaJ lod re~ato~ activity.The parties frequently f~ed their arguments in ternsof state constitutional doctrines aud presented theirroses in state supreme courts. Moreover, the challengesaddressed weaknesses in the concept of local autonomywhich even advocates of local power recognize the lim-ited tisd capacity of many localities to provide basicservices, and the problems associated with local deci-sions that have significant extralocal consequences.

Nevertheless, neither law reform initiative actuallydid much to wsaken Ioml responsibility for publicschools orloml power over lad use. The state courts dis.played a strong localist orienhtion. Most concluded thatloraf control of education is a legitimate state interestworthy of judicial protection even at the cost of signifi-cant king and spending inequalities among schooldistricts. The courts which feud that locaf control ofeducation violated state constitutional provisions havenevertheless afiirmed the wisdom of continued IoAautonomy over the schools and sought to reconcilegreater state financial responsibility tith a constitu-tional commitment to local control. Similarly, the stateshave generally left undisturbed the delegation of zoningauthority to local governments.

The Setting

The school finauce and exclusionary zoning litiga.tions of the 1970s and 1980s grew out of four underlyingconditions in stite-local relations.

First, the states have genedly delegated to localgovernments the responsibility for providing many basicpublic services, including police, fire, sanitation, localroads and public schools, and authority to control landuse. Second, local governments derive the bulk of theirrevenue from the real property tax. Third, there is anenomous variety in tible wealth among localities. Fi-nally, although localities operate within essentially fixedboundaries, people and industry are legally free to move.

The school finance reform effort sought to sever thelink between lomJ wealth and the quality of lod publiceducational programs by requiring the states to assume asignificant degree of financiaJ responsibility for publiceducation. The attack on exclusionary zoning attempted

to open up tie suburbs to lower-income housing, thus re-dusing the concentration of the poor in centd cities andincrmaing the degree of socinl and economic integmtionin metropolitan _ generafly. The goals of the twomovements were interrelated. Rsducing or eliminatingthe school finsnce role of local governments woddgreatly reduce Iosal tax burdens snd the incentive tozone out lower-income residents. Opening up the sub-urbs to lower-income families wodd reduce the disparityin property wealth per capita mnong communities,thereby reducing the difference in communities’ abilityto spend on education.

Both challenges were initially brought as claims U-der the Fourteenth Amendment to the U.S. Constitu-tion. During the early 1970s, however, the U.S. SupremeCourt rejected these claims, and the focus of litigationshifted from the federal COMS to the states.

School Finance Casea in the State Courts

Two aspects of the Supreme Court’s rejectinn of thechsllenge to the school finance system gave plaintiffssome grounds for hope as they turned to the stite courts.Flint, the Court had indicated that federalism concernspersuaded it to defer to state legislatures on the subjectof state taxing and spending. Federalism would not playarole in state court decisions, and the stite courts have along history of considering issues of state and local taxmd finance. Second, the comt bsaed its determinationthat education is not a “fundarnentel” interest for equnlprotection p~oses on the fact that education is not af-fnrded explicit or implicit protection mder the federalConstitution. By contrast, most of the state constitu-tions explicitly direct the state to provide for a system offree public education.

The chrdlenges to schnol tinance relied heavily on thestate constitutions’ education articles. PlaintWs con-tended that the explicit inclusinn of edumtion in stateconstitutions made education a “fundamental interest,”triggetig strict scrutiny under s~te equal protectionclswes. They nlso urged that the enormous interdistrictdisptities in the funding of public schools constituted afuilme on the part of the states to satisfy the independentmandate of the education articles. Most state courtswere, however, unpersuaded.

State courts upholding the existing school fi-nance system: Challenges to the school finance systemwere head by the supreme courts of 17 states. Both thestate equaf protection und education article claims wererejected outright in ten states Ariznna, Colorado, Geor-gia, Idaho, Maryland, Michigan, New York, Ohio, Ore-gon snd Pennsylvania. In a related case, the high coti ofWisconsin dso ti]rmed the tmditional system. Thesestates denied that explicit references in their constitu-tions made edumtion “fundamental,” and they generallyconcluded that provision of a minimally adequate educa-tion in sach district could satisfy state requirements.Morenver, many courts treated loml control of education

as integral to effective local self-determination. Tbe con-stitutions provisions for stite maintenance and supportof public schools were no bar to the delegation of admini-stration and funding tn the schonl districts. Indeed, thecourts often treated such a delegation as highly desir-able.

Plaintiffs did not chsllenga the legitimacy of the lodcontrol idea but rather sought to tm it to their own ad-

~~. They ged, fi~t, that local adminishtiveauthority codd be preserved even if fiscal responsibilitywere shifted to the stat% ad second, that for poorer dis-tricts, loml control required eqmdization aid as thesedistricts lacked the -ble wealth necessary tn supportthe educational pro-s their residents desired. Thesecourts, however, determined that loml control entiledlocal fiscal responsibility snd that the benefits of loralempowerment were worth the costs to the poorer dis-tricts, The courts held that fdl state funding of theschools, or other state efforts to eqtiize spending,would erode local control. The New York, Oh]o andPennsylvania courts expressly v-indimted the right of in-dividti school districts to spend more than their neigh-bors. The Wisconsin coti held that the local interest inadministering and funding schools is of a constitutionalm~itude compumble tn the state’s,

State courts finding constitutional viola-tion= Seven state courts upheld plaintiffs’ clnims, atleast in part. These courts fell into twn groups-thosethat found a violation of the educatinn articles, and thosethat fnmd a violation of the state equal protectionclauses.

Three states proceeded on an education @icle basis:New Jersey, Washington and West Virginia Their hnld-ings were strikingly nnrrow. The courts stressed the ex-empl~ position of edumtion among uI1public services,and denied that their decisions had sny implications forthe funding of other local services or for ineqmdities inlod tiation. Even within the context nf educatinn,these courts limited the force of their decisions by deny.ing that the sates had srry duty to fund education fully orto equalize interlocal wealth and spending differences,The courts tilrrned the right of local districts to spendabove state requirements, and to outspend their neigh-bors.

Four state supreme courts-Arkansas, California,Connecticut und Wyoming–determined that the schoolfinsnce system based on local property taxes violated thestate’s equnl protection clause. Three courts concludedthat edumtion w a ‘(fundamental” interest for equalprotection purposes, triggering strict judicial scrutiny,and that the existing system failed the compelling stateinterest test. The fourth court, Arkansas, held that thestite’s relimce on the local property ti base to fund thepublic schools served no rationul purpose,

These four courts held that their states had acted un-constitutiomdly in msking educational opportunity de-pendent on the “fortuitous circumstance” of the assessed

ln!ergo.ernmen~ Pers~tive/Summer-Fdl 198711

vdution of each district. They rejected the conclusion ofthe other state courts that lod authority over educationrequired local fisral responsibility. They found thatgreater equalization and state support would not reducelocal autonomy.

The courts were unclear ea to what their sate consti-tutions would allow in terms of local weafth disparitiesunder a reformed system, and there is some indicationfrnm later rases that despite the strong language aboutequalization these courts woufd be satisfied with a rem-edy comparable to that ordered in the New Jersey case,Robinson v. Cahill, i.e., increasing the resources avail.able to the poorest districts without either capping therichest districts or compelling full equalization of district& baaes. Moreover, none of these courts interpretedtheir state constitutions to require either full state fund-ing or complete equality in district spending.

Exclusionary Zoning Casea in the State Courts

During the last two decades, courts in several stateshave rejected the view that locef zoning is to be assessedsolely in terms of its effect on the “welfare of the particu-lar community,” have required municipalities to takeinto account the extralocaf consequences of their zoningdecisions, and have invalidated exclusionary ordinances.These cases have been seen as part of a “quiet revolution”in land use, in which state-level institutions—legisla-tures and administrative agencies aa well as the courts—are tid to be msertinggreater oversight and operationalresponsibilities in an area traditionally delegated to loralgovernments. Whatever the magnitude of the legislativeand administrative dimensions, the extent of the judiciallimitation of local exclusionary zoning has been over-stated.

Ordy fou state supreme cowrts have undertaken sig-nificant review of exclusion~ zoning—California, NewJersey, NewYnrk and Pennsylvania. Each of these courtsh~ pointed to the regional effects of local zoning deci-sions end compelled localities to consider the extrafosalconsequences. Each couct haa also urged the state tomonitor local zoning regionally or statewide. Yet, withthe exception of New Jemey, each coufi has largely leftthe structure of local zoning authority intact.

New York. The New York Comt of Appeals Uhehighest court) in its 1975 decision in&mnson v. Town ofNew Castle held that a zoning ordinance must not onlyprovide a balanced and well-ordered plan from the per-spective of the community but must also reflect atten-tion to regional needs. Berenson afso W]rrned the Legiti-macy of the commmity’s desire to maintain the statusquo. But the decision gave little indication m to how tostrike the balance between locaf interest and regionalneeds.

Bsrsnson invalidated a local ordinance excludingmdtifamily housing where it was plain that the town hadgiven no consideration to regional issues. In subsequent

decisions, however, tbe court upheld a five-acre lot mini.mum end an ordinance excluding multifamily hnusing.

California. A close reading of the 1976 landmarkcase Associated Home Builders of the Grsater East 13ay,Inc. v. Ci~ofLiuemore alsogives rise to doubts as to justhow far the court was willing to limit local land use regu.lations. The Livermore ordinance imposed a completemoratorium on local growth through a ban on new hous-ing construction permits. The court noted that 10A landuse controls would satisfy state judicial review so long asthe “general welfare” w served. The court had previ-ously considered general welfare to refer to the zoningcommunity, but plaintiffs here afleged that “the ordi-nance may strongly influence the supply and distributionof housing for an entire metropolitan region. ” The cotinded that the ordinance must be meaaured by its impactboth on the community and the region.

While this w en apparent setback for Iocaf auton-omy, other aspects of the opinion tended to preserve lo-d power. Like the NewYork court, the California courtnded that the desire to exclude new residents was not il-legitimate per se, and it gave little guidance on how tobalance the interests of the community and the region.The court w ambivalent as to how strictly lower courtswere to review local exclusionary actions. In this =e,the court placed the burden of proof on the challenger,presumed that Livermore had balanced local and re-gional interests in good faith, and tilrmed that sincenonresidents had no constitutional entitlement to moveinto the community, the ordinance wodd be measuredby the traditionally more liberal standards for validity ofIod land use restrictions. The ordinance w upheld.

Pennsylvania. The Pennsylvania Supreme Courtwaa the pioneer, invalidating in 1965 a suburban ordi.nance requiring fnur-acre minimum lots, and in 1970, atwo-acre minimum and an exclusion of multifamily hous-ing. In 1975 and 1977, the court upheld the rights of land-owner or developers to build apartments on tractszoned for single families in communities which hadzoned token amounts of laud for ap~ments but woufdnot permit building. In a pair of caaes decided in 1983, thecourt upheld the application of municipaJ ordinanceswhich prevented the construction of townhouse develop-ments, but in 1985 it held unconstitutional the totaf ex-clusion of mtitifamily dwellings from a suburban cnm-munity with most of its land zoned for five-acre mini-mum lots.

The court, however, has permitted municipalities tocontinue to zone, to impose some costs on new housingand to reduce the availability of multifamily residences,without any new state or regional legislative or adminis-trative oversight.

New Jersey. The msauft on exclusionary zoninghas been carried out furthest in New Jersey. In the well-known Mount Luwel case in 1975, the New Jersey Su-preme Court declined that “the zoning power is a policepower of the state and the local authority is acting only as

12 Intafgovemmsntal Psmwtive/Summer-Fall 1987

a delegate of that power.” Since there w no state inter-est in excluding low-income people from a commuuity,the Mount Luursl coti nded that municipalities couldnot impose requirements which unnecessarily drive upthe cost of housing. Moreover, the court found that thecommunity’s duty to zone for the &ned welfare en-tailed an obligation to “ti]rmatively plan and provide, byits laud use regulations, the reasonable opportmity foran appropriate variety and choice of housing, including,of course, low-and moderate-cost housing.”

Despite the strong language of the Mout hmldoctrine, the coti initially acted cautiously and pre-served a substantial amout of lod autonomy over zon-ing. In 1977, the court held that localities need not comeup with a precise forrmda to maaaure their “fair share” ofregional housing needs. Rsviewing courts could look sim-ply to the “substance” of a challenged zoning ordinancemrd the “bona fide efforts” of a municipality to removethe exclmion~ barriers. The couti expressed a strongpreference fur legislation to determine and allocate re-gional housing needs.

In 1983, the New Jemey court decided that it woddno longer defer to local decision making or wait for thestate to come up with regional plans. In Mount burel 11,the court put the burden on the suburbs to demonstratethat they were providing for their fair shae of presentaud prospective housing needs. Localities were requiredto remove all excessive restrictions aud exactions; thecourt’s priur decision upholding lod power to ban mo-bile homes was overndet suburbs were directed to pro-vide incentives for the construction of low-aud moder-ate-cost housinG and the triaf courts were authorized toenter remedial orders directing that developer who in-clude a low-income housing component in their plans beallowed to build.

Momt kurcl 11, especially its remedial provision,galvanized the state legislature into action. The FairHousing Act of 1985 requires communities to use theirland use re@ations to provide a realistic opportunity forthe construction of low-and moderate-income housing.The legislation preserved a measure of local autonomywhile grmtly increasing the state’s role: the localitywodd determine its fair share uf the housing aud prepareimplementation plans, but a new State Couucil on Af-fordable Housing would set criteria and guidelines,monitor muiciprd actions and, through its power to im-muize mmicipalities from lawsuits, affect the contentof mmicipul zoning and housing plans. The legislationwas far more protective of the local interest in control-linggrowth than the court had been. Challenges to exclu-sionary zoning were transferred from the courts to a newadministrative process, and a moratorium was imposedon builderc’ remedies. The New Jersey Supreme Courtupheld the act.

The New Jersey Supreme Coti probably went fur-therthan any other in limiting local autonomy out of con-cern for broader regional interests and in forcing the

state to take back some of its delegated powers overlanduse. Mount kurcl is the best—perhaps the only—con-temporary illustration ofjudicial utilization of the mder-lying legal nurms of plenary state power and inherent lo-cal powerlessness in order to curb local autonomy. Yet,even here, the powerlessness of local governments seemsoverstated. The legislating still allow commmrities toprotect themselves from uuwanted development.

Local Control as State Constitutional Value

State supreme cotis place a high value on the ideaof local control, even Winst a legal backgroud of pre-sumptive state power and limited local self-~venrment.Why? The courts have actually said s~risingly littleabout what they mean or why they consider local controlto be so valuable. While the general lack uf agreement orexpbmation may confirm the strength of the judicialcommitment tu the local government idea, it dso makesanalysis more diff]cult.

Scholars have put forward two general normative ar-guments for local autonomy allocational efficiency andpolitical participation. A third expkmation, which seemsto capture more closely the tenor of the judicial reacon-ing, is the courts’ apparent equating of local autonomywith individual or family autonomy.

Locaf Control aa Efficiency. Some scholm haverogued that local control promotes efficiency because itpermits a closer match between services protided andconstituents’ preferences than wotid be possible if thedecisions were made at a higher level of government. Armmber of courts have echoed this approach.

In the school finance cases, courts repeatedly notedhnw local control enabled different communities to acton different preferences. In the land use cases, local zon-ing was seen as permitting diverse patterns of development so that households cuuld have different kinds ofcommunities available to them.

Locaf Control and Participation. Other schol-m have argued for local control as a means of enhancingopportrmities for popdar participation in government,and several courts have agreed. The cotis which af-firmed the traditioxml school tinace system referred tolocal control in the decision-making process: local fiscalresponsibility meant that there was real local power. Theland use cases also reflect judicial appreciation of thevalue of local participation. Only the New Jersey courtinduced the state to oversee more closely its delegationof power over land use. The other activist stite courtsleft alone continued local participation in land use deci-sions.

Local Control end Personal Autonomy. Whilelocdist courts have been attentive to the values of effi-ciency and participation, the tenor of their opinions suegests that the strength of tbe judicial commitment tolocalism is due to their intuitive linkage of localism tohome and family.

lntergovernmen~ Perswctive/Summer-Ftil 1%7 13

Locsl control of zoning has been SUDDOrtedbecause. .it has been seen as more ‘protective of tbe home thanstate or regional re~ation. Local responsibility for pub-lic edumtion has been maintained because local schooldistricts seem more likely to protect the family. Indeed,“home” and “family” were frequently relied on or alludedto in these cases. The lixdmge of local government tohome md family remits in a deferential attitude towardlocal power. These courts tended to view Iod govern.ments less as decentralized wielders of public or politicalpower nnd more as extensions of the individti or thefmily. This connection between local governments andhome and family may explsin the tendency to protect lo-cal autonomy and defer to local judgments in crises wherethe fonnsl legal primacy of the states might have led tovery different results.

These courts tended to dowplay the doctrine thatloml governments are created by tbe stites and insteadtook local governments md their powers as givens andnot ss the product of conscious choices by states to struc-ture gevemmenti authority in a particular WY ad withpsrtitiar consequences. As a result the courts nssmnedthat in a system of local governments inequsfities hap-pen. The stite wss genemlly held not responsible for theinequalities or even for the system of local government.

Since, for the most pti, these cases involved the ef-forts of private parties to curb localities or force thestates to take a more active role, the power of the state todisplsce local decisions was not at issue and the inherent-right idmwas not directly tested. It is, thus, still good lawthat there is no inherent right to local self-governmentsnd that states have ple~ power over their subdivi-sions. But, in the sftermath of these litigations, it is evi.dent that many courts take the existence and power of lo-cal Wvemment ns given and highly desirsble. Suchlocalism haa constrained efforts to reduce disptities inthe quslity of education snd to open the suburbs to morelow-income residents.

These mes su~st that the issue of state versus lo-cal power is a false one because of the overinclusivenessof the tem “1OCSIgovernment.” Not all local gover-nmentsbenefit from Iocafism. Cities faced with heavy de-mmds for public services snd the emigmtion of the mid-dfe CISSSars likely to favor greater stite support of thoseservices. Lod autonomy is of limited use to loditieslacking the finsncisl resources to enjoy it.

Many upper-income sub~bs do better mderlocalism. Their primmy concerns are for control of theirschools and the protection of their homes. Those powemhave been dele~ted to them by the state legislaturessnd, in gsnersf, vouchsafed by the courts. These commu-nities rnsy be Ie@ly powerless to prevent state legisla-tion interfefigtith 10CSIautonomy, but they me prncti-calfy powerfd due to the strong ad contirmingtiditionof state delegation to local governments in these mat-tem.

Rtihard Briffault ti an Associate Professor ofLaw at Columbia University.

LocalGovernments

in StateCourts:A New

Chapter inConstitutional

Law?

Michael E. Libonati

To the casual reader, state constitu-tional texts seem to delimit state legisla-tive powers over the activities and af-fairs of local governments, just as theysafeguard private autonomy. For exam-ple, prohibitions against local or speciallegislation in a state constitution wouldappear to protect against a legislativeenactment applicable only to a single in-dividual as well as one applicable only toa specific city. Yet this is not the case.

Similmly, state constitutional provisions redatingthat due process be afforded before a person or a corpo-ration is subject to a serious deprivation by governmentdo not expressly distinguish between protictid privatecorporations and n“ghtless mmicipaf corporations. Stateconstitutional provisions proscribing the taking of“property” do not, on their face, difFerentiate betweenproperty omed by a private pemon and that owed by,say, a redevelopment authority. So, tbo, a constitutionalrequirement that each bill have a title that accwtely de-scribes its content would seem to be applicable whetherthe litigant claiming noncompliance is a county or a pub-lic employees wion.

In addition to geneml state constitutional provisionsthat limit legislative discretion as to substice, process,form and mode, there we may restrictions that speak toptiicdar questions of public law. Take the case of aschool district with a limited tax base which feels ag-grieved by cment arrangements for state financial sup-port of public education. It is not clear that the serviceprovider (i.e., the school district) is less afTected than anindividual student-consumer or pment-consumer of edu-cational services where a state constitution guamntees aright to a thorough and eff]cient system of public educa-tion.

Another example is provided by state constitutionalprohibitions of “ripper legislation,” that is, legislationpqortingto vest the power to administer municipaJ sf-faim in a speciaJ bored or commission. It would be mostpeculim if such a constitutional norm-the p~ose ofwhich is to provide a defense against state interferencewith local authority -cotid not be invoked against thestate by mI affected municipality. It wotid be a sorrystate of Mairs if the Wvemmental uit (e.g., a mwici-pslity) representing a lod electorate that opted forhome-mle status was barred from raising in court theclaim that a state statute is repugnant to the home ruleprovision in the state constitution. Yet that is the law in amajority ofjnrisdictions.

The Received Doctrine

The received doctrine concerning the juridical statusof local government units can be summarized in the fol-lowing propositions (1) the state constitution confers norights on a local government mit against the sovereignstate (2) consequently, a local government has no stand-ing to assert state constitutional claims against the statesovereign. “Standing” is the ability of a litigant to raise aclaim in court. W]thout standing, a case, however merito-rious, is simply not heard. The question of who has stand-ing to invoke the law can determine whether the law isenforced or not. If local governments lack standing, thestate is effectively immuized from challenge based onconstitutional grievances, uless a private plaintiff is saf-ticiently affected to have stidlng to bring the claim.

As a practical matter, much of the legislation havingto do with local government takes the form of “pure”public law, that is, statutes addressed to internal proc-

Intsrgovernmenti Parspmtive/Summsr-Fall 198715

esses and routines of state or Iod public administration.A reading of state statutes pertinent to local governmentlaw will reveal the absence of judicial decisions apprais-ing the constitutional validity of an enormous body oflaw, except for governmental powers or activities that af-fect the private sector.

Annotations of local government law that do appware the product of advisory opinions rendered by state at-torneys genemf or comptrollers. Thus, elected or ap.pointed stite off]cials serve, for all pm.ctical pnrposes, asthe court of last resort for locaf @vemments seeking toresolve public law controversies. No judicial forum isavailable because judiciaf doctrine denies standing to lo-cal governments. It is hard to see how a practice thatgives the last word on state constitutional law questionsto an executive o~cial can be squared with the tradi-tional notion that the mfe of law can be assured only ifexecutive brnnch decisions are subject to review by thejudici~.

Since no individual rights or entitlements are sf-fected by pure public law statutes, neither individualsnor private organizations have standing to contest them.Even where states recognize that a taxpayer has stand-ing to chaflenge the Iawfdness of govemmentaf activity,there is a significant empiricsJ question as to whether agiven individual haa the initiative, expertise nr resourcesnecessmy to litigate complex public law questions in thepublic interest. Yet even if an individual &payer has the“right stuff,” how can it be that a lod government (ss acollectivity) cannot assert claims that can be made bymy taxpaying constituent by virtue of his or her stake inthe proper msnagsment of the collective entity?

In recent years, state courts have begun to tie anew lnok at the capacity nf 10A governments to haveconstitutional “rights” md to assert constitutionalclaims against the state. By doing so, many courts haverefed in favor of Iod guvemments and, in the process,have begun to develop a new and intellectually excitingbody of state constitutions doctrine on state-local rela-tions.

Standing for Local Governments

As to the question of standing, several approachesare now discernible in case law. Decisions from NewYork and Utah are illustrative. In TooJn of Black Brookv. State (362 N.E.2d 579, 1976), the New Ynrk Court ofAppeals (the highest court) held that a town has standingto contest a sfle~d statutory infringement of the homerule power of the state constitution. In Village ofHerkimr v. tilrod (449 N.E.2d 413, 1983), however,the court held that a vill~ has no standing to challengethe constitutionsfity of a statute restricting iti gover-nmental powers. Thus, the New York approach assignsdifferent rufes of stiding to different controversies, de-pending on which provisions of the state constitution areinvoked. It is hard to imagine on what ba,sis courts canjustfi such a sorting of constitutional provisions into

two piles, only one of which legitimizes a Iocafly initiatedand financed challenge to state legislation.

The laurel for the most sensible apprnach in re-ported wes goes to tbe Utah Supreme Court, in Ken-necott Corporation v. Salt hke Comty (702 P.2d 451,1985). The county sought to chsllengs a state assessmentof mining properties which did not reflect the frill cash-value standard in the constitution. The state supremecourt enunciated two criteria for standing, one aimed atensuring a fufl and vigorous advetid presentation ofthe claim and another aimed at vindicating the public in-terest in assuring the rule of law. Tbe county w held tohave standing on the basis of traditional criteria that tbeinterests of the parties be adverse, and the other that thechallenging party have a legally protectable interest inthe controversy. The court did not succumb to the blan-dishments of the notion that the connty, as a creature ofthe state, was irrebuttably presumed to exist in happyh-ony with the state. The court held that the assess-ment determinations of tbe state k commission dl.rectly md adversely affected co~ty budget and taxingfunctions to the extent that mining properties were un-demssessed.

The court also delineated a second, separate stand-ing test, according to which local government is affordedstanding to raise issues of ~eat public importance, suit-able for judicial resolution, when such matters as under-assessments might otherwise be insulated from chaf-lenge. That is, a chaflenge would not likely be brought bya property owner benefiting from m underassessment,the state agency making the underassessment, or acounty taxpayer. The court recognized couty standingfor the very pragmatic reason that only the Inral gover-nmentunit is likely to have the will and the resources tocheck constitutional misconduct in state administrationof the assessing function.

Asserting State Constitutional Clalma

Another line of decisions of importance to local gnv-emments concerns specific allegations of infringementof state constitutional noms.

One significant cluster of claims has to do with theprocedural validity of state statutes that impinge onlocaf government, These challenges involve purportedviolations of such state constitutional arcana as the sub-ject-title rufe and the prohibition of local or special legis-lation. Unless the affected 10CSIentity baa standing tochsllen~ their validity, statutes which are, at root, un-constitutinnsl will be controlling. Recent decisions,however, recognize successfd chsflenges by local gov-ernments against statutes with a defective title (NewMexico), Iocd or special legislation (South Carolina), andeven statutes violating separation of powers principles(Uti).

Some state courts are also tacitly recognizing the“dignitary” interests of loral governments, that is, theirrighk to procedural and substantive fair treatment. Mu-nicipalities in New Jersey and Pennsylvmia subject to

16 Intsrgmmmsnti Psm_/Summr.Fdl 1967

the re~atory authority of state land-use developmentagencies were held to be constitutionally entitled to no-tice and to an opportunity to be heard on a developmentapplication pending before the agency. An intermediateappellate court in Ohio mled that the equaf.protectionprovision of the Ohio Constitution applied to a munici-pality exercising proprietary functions. The court heldthat a state agen~ acted unconstitutionally when it im-posed obligations on the city of Cleveland that were notimposed on other private or public sector entities. Othercourts have employed a rationaf baxis standard for ap-praising the vafidity of local government challenges tostate statutory classifications.

Several other recent constitutional cases show awill-ingness to apply substantive constitutional protectionsto 10CSIgovernments. Thus, a provision in the LonisiauaConstitution prohibiting the taking of property withoutjuxt compensation w-asheld to invd]date mcompensatedexpropriation ofacity-owed park. ATennesseeappel-late court mled that retroactive application of astatutory provision holding the statute of limitations ap-plicable to actions against governmental entities imper-missible stripped a governmental entity of a vested right.

A fascinating set of cases traces the implementationof state constitutional provisions in Michigan and Mis-souri that prohibit the state both from mandating newor expanded activities by local governments without fullstate financing of the additional costs and from reduc-ing the state-financed portion of the costs of existingmandates. Accordingly, a Michigan statute imposingnew duties on localities resulting in increased costs ofsolid waste management was mled unconstitutional. InMissouri, a state statute increasing the salaries of countyemployees was held to violate Missouri’s version of thissignificant new protector of local fiscal autonomy.

A New Chapter In State Conatitutlonal Law?

Recognition that a local government possesses pro-ceduml, dignitary and autonomy interests protected bythe state constitution opens a signiticsnt new chapter inthe development of state constitutional law. In the firstplace, stite courts have begun to undo the unim theoryof sovereignty according to which localities are pre-sumed not to have interests adverse to those of the statewhich “created” them. Second, local governments areviewed not as mere servants of the state, but as potentialprotagonists in the ongoing process by which state legis-lative claims to omnipotence are checked and balancedby judicial review. Thus, a significant new claxs of poten-tial plaintiffs is now empowered to vindicate the rule oflaw in a variety of public law areas hitherto unscmtinizedby the statejudiciary. Fourth, state courts have indicatedan increased willin~ess to resolve conflicts that inevita-bly arise between the general interests represented bythe state and the partictdar interests represented by lo-cal governments within the overriding frmnework of tbestate constitution.

These decisions, which come from every region ofthe country, portend the emergence of an intellectuallychallenging state constitutional law of intergovemmen-M relations. Until now, state constitutional discourxeabout state-local relations has focused afmost excht-sively on home role. Richard Briffatit has shown howcourts have given weight to the value of local autonomyin educational finance and zoning liti~tion, even thoughthe state constitution contains no express command todo so. New roles of standing, however, suggest a strategyfor linking the inchoate claims of local autonomy and de-centralization to a variety of express state constitutionalprovisions, whose potential for transforming the re-ceived body of public law doctrine has not been com-pletely explored.

Until now, the impact of legal doctrine on the theowand practice of state-local relations has ranged betweenindifference and outright hostility towd decentti]za-tion and state-local power sharing. W]tness Dillon’s Ruleof narrow and ungenerous construction of statutes em-powering local governments, and the judicially createddoctrine of implied preemption. Wcently, however, vari-ous state appellate courts have begun to establish thefoundations of a modem constitutional law of state-ledrelations to replace the monolithic concept that hastied the conceptual roost for the Iaxt cent~.

Michael E. Libonati is a Professor of kw atTemple Universi@.

Intergovernmental Perspective/Summer-Fall 198717

A Catalog of Federal Grant-in-Aid Programs toState and bcal Governments:Grants Funded in FY 1987

ReportM-153 $10 August 1987

ACIR’S fifth Catalog of FederalGrant-in-AidPro-

grams to State and Local Governments chronicles changes

in intergovernmental aid since 1984, and offers particular

insight into trends during the Reagan years. The Cataloglists all categorical and block grant programs funded onJanuary 1,1987, highlighting the 73 new programs addedsince the last compilation. Newin this edition is a separatelisting of 43 aid programs not funded from 1984 to 1987.

A Catd.g of Fed~Gmt-in-Aid he

to State and Lacnl~enti

G-b Fnnd& inFY 1997

Significant Features of Fiscal Federalism1987

Report M-151 $15 June 1987

Significant Features of Fiscal Federdism: 1987 con-tains completely revised and up-to-date information onfederd, state and local revenues and expenditures; taxrates; public sector employment and earnings; constitu-tional and statuto~ restrictions on state and local spend-ing and deb~ and per-capita rankin~ for state and localgovernments. New in this edition are exclusions, adjust-ment and deductions permitted under state income taxcodes; and sources of revenue and expenditure for dl citieswith populations over 25,000 and all counties over 50,000.

(See paw 39 for order fem.)

Fiscal Discipline in the Federal System:National Reform and theExperience of the States

Report A-107 $10 July 1987

ACIR’S major new study of fiscal discipline in the fed-eral system reviews the experience of the states with vari-ous mechanisms to determine how they might be applica-ble to the federal government. The study finds that fiscaldiscipline tools are generally effective in the states, result- Fi*callnsclpllw In

ing in lower spending, and lower deficits or higher sur-TheFtieml Symem:

Natbonal Reform ~d The

pluses. States use all or some of the followingmechanisms: Exptienrn Cn The States

constitutional and/or statutory requirements for balancedbudgets, executive line-item veto, constitutional debt limi-tations, spending and taxing limits and capital budgeting.This policy report outlines historical trends and perspec-tives, reviews current reform actions and proposals, ana-lyzes the effects of state measures, and makes fiscal disci-

@-—.

~.e.pline recommendations for consideration by the federal

—. .b,,,Mi-

~overnment.

Federalism and the ConstitutionA Symposium on Garcia

ReportM-152 $10 July 1987

Can the states survive as autonomous political units?Can the benefits of a federal system be presemed? Explorethe impact of the U.S. Supreme Court’s controversial Gar-cia decision on federalism and the Constitution in this im-portant new ACIR report. The decision has refocused na-tional attention on political and legal questions of federal-ism, defining the issues more sharply than at any timesince the New Deal. A symposium of legal and politicalscholars convened by ACIR in 1986 debatedthe causes and aimpacts of the decision in abroad context of constitutional ,Zc.-.-law, history and politics.

Local PublicEconomies:

Provision,Production

andGovernance

Ronald J. Oakerson

The last two decades have seen a ma-jor shift in thinking about patterns ofpublic organization affecting local gov-ernment. New ideas and concepts havegenerated new research with important,often counter-intuitive, conclusions.Patterns once despised are seen to havevirtues; those once welcomed are viewedwith skepticism. Yet the traditionalAmerican commitment to local self-government appears to be as strong asever. A new consensus maybe emergingaround a simple but powerful idea—thatmtitiple local governments togetherconstitute a “local public economy,”consisting of a provision side and a pro-duction sih that can be organized inquite different ways.

Distinguishing provision (taxing and spending) fromproduction and delivery of local goods and services hasfar-reaching implications for the organization and gov-ernance of a local public economy, including a greater re-liance on private and intergovernmental contracting toproduce sewices, and a greater number and variety of lo-caf government jurisdictions to make provision for lodservices. Both of these implications raise issues of inter-local governance to a high order of priority.

ConceptualFoundationsThe structure of a local public economy rests on a

distinction between provision and production of Iodpublic mods and services. Provision refers to collectivechoices that determine:

● What goods and services to provide (andwhat are to remain private);

● What private activities to redate, and thetype and degree of re~ation;

● The amount of revenue to raise, and how toraise it (whether by taxing or user pricing);

● The quantities and quality standards ofgoods and services; and

● How to arrange fnr production (whether bya department of local guvemment, contract-ing or some other interlocal arrangement)

Pmdution nn the nther hind, refers to the moretechnical processes of transforming inputs into out-puts–making a product or renderinga service. Althoughproduction is often viewed as entirely the work of agents,it is frequently better viewed as “coproduction,” a proc-ess in which a specialized producer interacts with a citi-zen-consumer to produce a service.

The distinction between provision and productionlays the conceptual foundation for a new understandingof the organization of local public economies. Differentconsiderations apply in the choice of an organizatiomdunit topmuide a service from those involved in the ~hOiceof an organizational unit to prod~e. The work of lodgovernment is increasingly viewed primarily in terms ofprovisioning rather than producing. Although the or-ganization of production can be and often is govemmen-ti, frequently it becomes a private responsibility. Pat-terns of organization on the provision side ofa local pub-lic economy thus can differ from those on the productionside, and a variety of different arrangements can be de-signed to link provision with production.

Organizing the Provision Side

The organization of the provision side nf a loral pub-lic economy involves a set of problems that fall into threemain classes (1) preference revelation, (2) fiscal equiva-lence and (3) accountability.

Preference Revelation. The problem of individ-ual preference revelation derives from the incentives ofindividuals to conceal their true preferences for publicgoods and services if provision is organized strictly on a

20 lntergovemmenW PerspacUve/Summer-Fdl 1987

voluntary basis, The institutional requirement is forsome process of collective choice from which mr individ.ual cannot simply opt out. (Individuals can of coumemove out of a local jurisdiction, but this is different fromopting out of provision while continuing to live there.)Given some form of collective choice, bounti~ issuesbecome critical. An optimal set of bomdaries will includethose directly affected by provision choices, hut not ex-tend so far as to include commmities with widely differ-ent preferences. In sum, any provision mit shotid, asclosely as possible, define a corrzmuni~ o~itiemst among

a gTOUPOf peOple whO shine apiece of local geography.

Fiscal Equivalence. Efflcieng on the provisionside of a lomd public economy depends on the degree of“fisd equivalence” that is attained. This criterionmeans simply that individuals (households or firms) andgroups (neighborhoods or commimities) “get what theypay for and pay for what they get.” A lack of tiscal equiva-lence udermines the local community of interest.

Accountability. Provision uits rdso must ddwith the potential for distortion in “principaf-agent” re-lationships between citizens and off]cials. All communi-ties stand in need of agents, including both elected offi-cials and civil servants, who can represent the interestsof members. Provision wits need to be organized in suchaway that ordinary citizens are able to exercise a signifi-cant memure of “voice” so that agents can be held ac-comtable in the conduct of community afTairs.

Organlzbrg the Production Side

Organization on the production side is breed on con-sidemtions having to do with the technical transforma-tion of resoucce inputs into product or service outputs.Unfortmately, no one has a recipe for producing geodpolicing or education, for example, though somewhatmore is knom about producing good streets. Almost rdllocal public goods and services, however, depend on theavailability of spec~lc time-and-place information, suchas neighborhood conditions, to support effective produc-tion choices. Emphasis has to be placed on the sde andorganization of a production process that allows individ.ual producem to m&e locally informed judgments. Thisis a much different problem than involved, for example,in a typical assembly line.

Economies of ScaIe. An importaut distinction ex-ists between local public goods that tend to be capiti in-tensive and services that tend to be labor intensive. Capi-tal intensive goods are more likely to be chucterized byeconomies of scale, a decrease in the average unit cost ofproduction as the scale of production increases. Labor in-tensive setices are more likely to exhaust potentialeconomies of scale quickly, in part because of greater de-pendence on specific time-and-place information.

Coproduction. Traditiondly, production side con-siderations have placed a heavy emphasis on the impor-tance of management. Some public services also dependon the participation of citizen-consumers in produc-

tion—a process called “coproduction.” While it is wellknown that the productivity of local public agencies suchas schools and fire departments depends in part on thecooperation of citizens, it is not well mderatood how toincorporate citizens into production processes, Yet citi-zen-consumers are often a crucial source of the time-a.nd-place information producers need to be effective.

LlrrklngProvisionwith Production

Distinguishing provision from production in a lodpublic economy opens up a range of possibilities for link-ing one to the other. The main options are as follow

Self-prod~tian. A provision uit organizes its ownproduction unit. This is the traditional model of local or-ganization with departments for police, fire, publicworks and so fofih.

Coordinated production. Two or more productionuits coordinate their activities in whole or in part.

Joiti production. Two or more provision uitsjointly organize a single production unit.

Intergouemmentil con~cting. A provision uuitcontracts for production with another provision ~itwhich then assumes responsibility for organizing pro-duction.

Private contacting. A provision uit contracts witha private vendor, who is responsible for organizing a pro.duction unit.

Franchising. A provision unit sets production stan-dards aud selects a private producer, but allows citizen-consumers to choose whether to purchuse the service.

Vo~hering. A provision unit sets production stan-dards and decides on the level of provision (through itstaxing and spending powers), but allows individuals (orgToups) to engage different producers, public or private,at their discretion.

The potential variety in orgwnizingand relating pro-vision to production is much greater than a traditionaltiew of lod government wodd suggest.

Governance

The governance of a local public economy is not con.cerned directly with either provision or production, butinstead has to do with a choice of rules within which pat-terns of provision and production emerge, and with theresolution of conflict among participants, includingmaintaining agremble and equitable arrangements.Viewed in this way, governance is sep=able from bothprovision and production.

When conflict occurs (for example, over municipaJbonudaries or the incidence of taxes), governance ar-ran~ments must exist to apply gened rules to specificcases and constrain participants to reach settlements,Fisd disparities among provision units area potentialsource of conflict in most highly differentiated local pub-lic economies. Adjustments in tbe fiscal rules governingrevenue capabilities—in particdar the availability audpossible sharing of various tax bases—are often re-sponses to fiscal conflict.

Intergovernmental PerswctivelSummer. Fall 198721

DistinguishingProvlslonandProduction:Implications

Distinguishing provision and production im-plies a greater use of both pcivate and in.tergovemmentaf contracting to produce loccfpublic goods and services.

Current Practice. Private and inter~vernmentalcontracting is widely practiced. A recent ACIR studyfound that 90.8 percent of the municipalities in a na-tional sample reported at lest one setice contractamong 34 service activities, Most municipalities thatcontract out, however, use this method of production inonly a smnfl proportion of their service responsibilities,

Significant change in the natue of mmicipal con-tracting hna tien place since the 1970s. Contacting inthe pefiod prior to 1970 wns heavily skewed toward thepublic sector. ACIR found in a 1972 study of municipalgovernments that interguvemmental contracting wasthe preferred alternative to self-production. Because of alack of private vendors red/or a lingering concern withcorrupt practices in awding contracts, municipal gov-ernments avoided private producers in favor of govem-mentaf jurisdictions when shedding service production.This reluctance to we private vendors hns diminishedsignificantly. The proportion of communities reportingat least one private service contract exceeds the percent-age reporting at lesst one intergovemmenti contmct by18 percent. This reflects the growing number of privateservice contracts, not an absolute decline in in-tergovernmental contracting.

Although contracting is employed to some extent byufmost every community, such arrangements still meutilized to produce only a fmction of the total servicesprovided by lod government. The mean percentage ofservices contracted in our sample is only 27 percent. Al-most hclf (45 percent) of cities contract for less than 15percent of their service responsibilities.

Efficiency Gains from Contracting. Empiricalstudies of ~bcge collection, electrical power, tire pro-tection, police protection, and an assortment of custodiclad genernl services have found that contracted serviceproduction nets significant-but variable-savings overgovernment self-production.

An economies-of-scale argument su~sts that theadvanta~s of contracting wotid tend to diminish, otherthinm being equal, as provision units increaae in popula-tion size. The ACIR study finds, however, that this rela-tionship holds only over a range of small municipalities.Over the middle to upper size range, reliance on con-tracting tends to increase with size. This is not what onewodd expect if economies of scale lead municipalities tocontract out.

The ACIR study conficrns that competition amongpotential producers is important to a decision on the ptiof a municipality to contract out. Municipalities that arelocated in more competitive economic environments,such as densely populated metropolitan arem, tend to domore contracting. Competition does not akvsys require,

22 lntargovemme@ ParaXe/Summer-Fdl 1987

however, having alternative vendors in place. A munici-y~ity generally retains some capability for self-produc-tion (if only IeKal authority), thus ensuring at ieast thatmuch choice between production arrangements.

Various politicaJ factors also are associated with adecision to contract out. Relatively liberal annexation orconsolidation authority tends to diminish reliance oncontacting. The incidence of contracting SISOtends toincrease with the presence of fiscal rules that restrict lo-cal taxing and/or spending.

The Relevmce of Provision Arrmgements. Inorder for citizen-con; umers to benefit from contracting,there must rdso be a provision unit able to acquire infor-mation about alternative producers, choose a productionmethod, select a producer, negotiate a contract andmonitor performance. Provision arrangements are cru-cial to the utility of contracting.

Provision srrcngcments dso determine how effi-ciency gains will be distributed. Who benefits? Is it citi-zen-consumers, either through tax satin=, increasedlevels of service, or both? Or do local politicians, manng-ers ad bureaucrats grab the lion’s share of benefit by ineffect distributing efficiency gains to the advantage oftheir ptiicukir interests?

Tbe ACIR study contains some interesting resdtsrelative to these questions. First, contacting tends to re-duce expenditures when municipalities contract out lessthsn 25 percent of their service responsibilities, buttends not to reduce expenditures when contractingmoves beyond 25 percent. This makes economic sense. Ifthere are efficiency gains from contracting, it followthat the more a municipality is able to contract out (pre-sumably within some limit), the lower the tax-price ofsetices provided. As the tax-price decreases, servicesdemanded by citizens ran be expected to incre~e.

The fundcmenti importance of contacting is theability of provision units to choose whether or not to con-tmct out. The availability of a marketplace on the pro-duction side does not necesstily mean that provisionunits shodd always choose to enter the mnrket cc collec-tive consumers, rnther thnn produce for themselves. Abasic function of provision units is to decide how to m-range for production. That ability to choose, not the in-herent superiority of one mode over another, becomesthe key factor in determining relative efficiency.

Orgnizing the production side of a localeconomy is fikely to involve a mixture of produc-tion crrcngements.

Tbe differentiation of the production side of a localpublic economy is the result of choices on the provisionside. Distinguishing provision and production conceptu-ally does not nlwys-even usually-lead to their acttiseparation. Most provision units, except sm~l neighbor-hoods, choose to organize the production of some serv-ices for themselves. Diflemntited production-dividinga set of closely related production tasks nmong differentproduction units—rests on the fact that most publicservices actually consist of a number of different service

componeiit.s. Production critetia vw among compo.nents of the s~]e semtice.

For example, consider police services, Police patrol,including response to emergencies, can be distinguishedfrom criminal investi~tion. In addition, patrol ran bedistinguished from dispatching, and investigative workin the tield from the work of a crime lab. As a classifica-tion scheme, patrol and investigation can be considered“direct services,” those activities that deliver setices di-rectly to citizen-consumers, while dispatch and ctie labran be considered “indirect services” that support theproduction of direct services. With respect to each com-ponent of a service, different production arrangementsare possible. Econnmies of smle may differ sharply. Ifone component of a service is labor intensive, while ano-ther is capital intensive, the economies of scale are sd-most sme to be different. Depending on specific circum-stances, different production components may be pro-duced internally, contracted out, or produced jointlywith another jtisdiction.

A traditional concern about mdtiple productionunits is possible duplication of effort. A recent ACIRstudy of police, education, tire and street services in St.Lntis Comty, Missouri found little duplimtion in spiteof a multiplicity of production mits. Specifl]zation, notduplication, is characteristic of production systems thatrely on mdtiple units. A mutual interest in avoiding du-plication may be stilcient to minimize its occurrence.

In addition to coordination, production mits spe-cialize by “alternation’’-dlviding responsibility on thebasis of time, space or clientele-to avoid duplicating oneanother. This tendency of multiple and/or overlappingunits to avoid duplicating may account for tbe failm ofconsolidation efforts to result in demonstrable cost sav-ings, as often predicted by metropolitan reformers.

Distinguishing provision and productiondraws attention to the potentiaf economic viabil-ity of very smafl locaf governments as “pure pro-vision” units.

In the past, analysts frequently eval~ted loml gov-ernment units on their ability toperform a range of func-tions. This language-functional performance-does notdistinguish provision and production. Inability to pr-oducewasequated with inability tope#om. But, as is nowwidely accepted, inability to produce does not entail in-ability topmui&, The acceptability of contracting raisesthe possibility of “pure provisinn” units-local gover-nmentsthat produce very little for themselves, but remainvery active as providers-tising revenue, holding elec-tions, deliberating on the needs of the community, chons-ing desired goods and services and determining supplylevels, shopping for vendors, negotiating contracts andmonitoring service flow.

Small units of local government-those under 1,000popufation-have been characterized as toy govern-ments, postage-stsmp governments and “lilliputs.”Somehow, the term “government” is identified withgreater concerns than maintaining the livability of a few

thousmd–-or se}.eral hundred-howeholds living with-in a dozen or so blocks, The legal nomenclatwe is oftenno help, Fourth-class cities in Missouri, for exmnple,have a maximum size of 3,000 people. If a city of 3,000 at-tempted to function as a city of 30,000, it would not beeconomically viable. But such units me not, in any func.tionai sense, cities. Nor me their governments city gov.ernments, except in name, despite the presence of mayorand council. This fact does not make small local guvem-ments insignificant, It makes them, functionally, neigh-borhood governments, providing a limited set of serv-ices. With few exceptions, they tend to be pure provisionunits, with most services contracted out either to publicor private vendors.

The provision side of a lucaf public economywill tend to be highly differentiated among a va-riety of units, small and large, with some“nested” inside others.

~es of Provision Units. The variety of poten-tially usefd provision units is quite large, but the basictypes are m follow

Munkipalitis. State law generally enable local citi-zens to create a vaiety of municipal units—cities, towns,

and villages—varying afong the dimensions of popda-tion size and governing authority. The limiting factor isthe rule that one municipality cannot overlap another—municipal gnvemments are, by definition, mutually ex-clusive jurisdictions.

Counties and townships have the virtue, in this con-text, of being able to overlap municipalities, Usually,counties are lager than municipalities towuships aremore likely to be smaller and, in some sases, contain onlyparts of municipalities in addition to unincorporated ter-ritory. Comties and municipalities (and to some extenttownships and mmicipalities) have the potentiaJ to func-tion as complementary provision units. Small munici-palities can function effectively aa neighborhood @vem-ments when cnmty government (among possible juris-dictions) is able to provide for linger scale public con-cerns. The limitation is that county and tomshipboundaries are predetermined and relatively fwed,

Special disttits are governmental units, usually cre.ated at lncal discretion with citizen initiative and con.

sent, that can overlap municipalities and have flexibleboundaries. The variety of special districts is greaterthan any other type of provision unit. Their purpose, ingeneral, is supplementary. Some speciaJ districts arenested inside existing units; some overlap existing uuits,often including botb incorporated and unincorporatedterrito~ still others are coterminous with existing unitsbut are created to add specific, specialized provision ar-rangements. This variety and flexibility can allow tbe or.ganization of communities of interest that do not happento coincide with existing local government boundaries,Tn be sure, not all special districts are equally worthy,but each sboukl be evaluated on the basis of its perform.ante, especially its ability tn represent citizen-consumerinterests. A blanket bias against special districts does not

Intergovernmenti Perspective/Summer-Fall 1Y87 23

app= tObe warranted, given the limitations inherent inthe design of general p~ose governments,

Performance Differences. No single type of pro-vision unit is equally well suited to protiding for all localpublic goods and services. One dimension on which pro-vision units vary widely is size. Another key issue is theextent to which a variety of units can efficiently coexistwithin a metropolitan area. Traditiondly, there has beenconcern about fragmentation of metropolitan areas, andalso a parallel concern about possible inefficiencies fromoverlapping jurisdictions. If provision is not sorted outfrom production, these traditional concerns make agreat deal of sense. Local public economies function inpart by tinding ways to avoid the inefficient conse-quences that are potentially associated with both frag-mentation and overlap,

Elinor Ostrom and ber colleagues at the Workshopin Politid Theory and Policy Analysis, Indiana Univer-sity, Bloomington, have carried out an extensive re-s~ch program to determine the effect of jurisdictionalsize on citizen evaluations of police, among other meae-ures of police performance. Their work consistentlydemonstrates that smaller uits tend to be more respon-sive providem of police services. Similmly, W]lliam A.Niskanen snd Mickey Levy at the Graduate School ofPublic Policy, University of California, Berkeley, foundin a study of California school districts that larger dis-trict size has a consistent negative effect on variousmeasures of school performance.

Wcent empiricaJ research bas found lower levels oflocal Wvernment expenditure to he msociated withhigher levels of fragmentation and overlap, even whencontrolling for the level of community service demand.Although it would be incorrect to claim that more frng-mentition is alwys better than less, it has been shownthat a variety of provision units can efficiently coexistand frequently do.

A kigbly differentiated locaf public economyneed not “fragment” a metropolitan community.

The term used to describe a differentiated local pub-lic economy is “fragmentation.” Unfortunately, thisterm mixes description with evaluation. It is one thing tosay fiat a metropolitan arsa contains al- number ofprovision units; it is another to say that the mdtiplicityof those units fragments tbe sea. Degree of fragmenta-tion is usually measured, by opponents and proponents,as the number of jurisdictions per 10,000 popdation.Such a meaemement, however, tells us nothing about the“f~enting” effect of multiple jurisdictions.

The important questions are whether, and the de-gree to which, a more highly differentiated local publiceconomy subtracts from the coherence of a metropolitancommunity. A coherent political community is one thatis able to act in relation to communit~de concerns; ametropolitan political community is one that is able toact on metropolitanwide concerns.

Daniel J. Elazar of the Center for the Study of Feder-alism at Temple University has ~ed that a complex of

local guvemments can be understood as a “civil commu-nity” constituted on the basis of intergovernmental rela-tionships. One mark of a civil community would be anability to tend simultaneously to common and diverse in-terests. The recent ACIR study of St, Louis County founda civil community of nearly a million people and of im-mense vitality. The community finds diverse expressionin 90 municipalities, a vigorous county government, 23school districts and 25 fire protection districts, pluscountless organized subdivisions. It also finds commonexpression, not only in tbe county government but dso inor~izations of municipalities, tire chiefs and policechiefs, the Cooperating School Districts of St. buisCounty, aspecieJ district for special education, and, mostespecially, in the county delegation to the state legisla-te end occasional coutywide referenda. Tbe countydelegation-31 representatives and seven senators, allelected from districts-become, in effect, “constitu-tional” decision makers for the civil community. Specialstate legislation for the county, together with the tradi-tional legislative deference on local bills, gives the civilcommunity a significant “constitution capability,

The civil community thus is able to maintain a formof metropolitan governance without hating to create ametropolitan government. The ideal of metropoli~government would consist of a single prouision unit foran entire metropoliti community. A local public econ-omy on the other hand generally consists of a variety ofprovision units. A single uit woufd, almost certainly, benon optimal. Instead of thinking of metropolitan gover-nance only in terms of large *neral-purpose gOvem-ments, it is possible to think in terms of a civil commu-nity that maintains a set of ties. These rules, usuallyembodied in state law, become a kind of “local gover-nmentconstitution,” a framework within which local citi-zens are able to constitute the provision units that be-come the building blocks of a local public economy,

To maintain an efficient local public economy~qfi~s st~cturd fle~bility and continuedavailability of alternative arrangements for pro-vision and production.

A local public economy is not static. The sources ofchange include shiti]ng citizen-consmner preferences,popdation growth (or loss) end developing technolo~.Adaptation depends on the availability of alternativesand the development of new ones. On the productionside, the availability of alternatives is simply anotherway of saying “competition.” In a public economy, how.ever, the competition is not simply among private ven-dors but also between public and private vendom andmnong public suppliers. If competition among privatesuppliers is not well developed, it may be important tomaintin the option of public production. Maintainingthe public option may mean, in turn, not contacting outeverything that codd be. Maintaining a competitive en-vironment codd also mem, for a large provision Wit,choosing to divide up tbe production of some serviceamong different contractors rather than contracting

24 l~ovsmmsntel PsrapscUvstSumn?ar-Fdl les7

with a single vendor. Where there area large number ofsmall provision uaits, however, competition on the pro-duction side tends to be self-generating.

The development of new production alternatives is akey both to adaptation md to productivity improve-ment—it is also a somce of change. This sort of develop-ment depends on entreprsnewship, which can be bothpublic and private. In both cases, initiative is a necessarycondition. Initiative increases with the number of possi-ble entrepreneurs. Couting the number of police chiefs,fire chiefs, directors of public works, city administratorsor managers, and school superintendents yields a crudemeasue, in each of these services, of the potential forpublic entrepreneurship in a metropoliti area. Such ac-tivity in St. Louis County, for exmnple, is ongoing, adresrdts in may successfd joint production efforts fmmthe fomation of educational consortia for computertechnolo~ to drug enforcement pro-s.

The continued availability of sltematives must ex-tend also to the provision side. Protision alternatives aresustained in several ways. One way consists of creatingnested provision units with somewhat overlappingauthority, e.g., municipalities within a county. A fom ofpolitical competition exists between officials in overlap-ping jtisdictions, allowing “voter sovereignty” (malo-gous to consumer sovereignty) to exercise a choice. Pro-vision alternatives csn also be maintained by mesas ofspecial districts. In general, the greater the number ofavailable provision units, either in place or to be createdat citizen option, the more likely it is that citizens will beable to obtin satisfaction of their preferences.

Distinguishing provision sad production sug-gests the possibility that redistribution on equitygrmmds may be more effective when recipientcommunities me organized as separate provisionunits, able to make their own production choices.

A dHlcrdty posed by a large nwber and variety ofprovision uuits is the emewnce of fiscaf disparities. Pro-vision-side efficiency implies a degree of dispfity inspending from own-source revenues. At the smne time,principles of equity suggest limits to the permissible~gs Of disptity-dthough no objective definition ofthose limits is possible.

The problem of equity in local service provision iscomplex. If it were possible to achieve equity simply byreducing disparities in revenue potential, then any pat-tern of organization that tended to increase those dis-parities would m a negative rating on equity in itsoverall scorecard. Matters are not, however, so simple.The expenditure side of local @vemment is at least asrelevant to equity as the k side. What is more, the effi-ciency with which money is spent, ad the responsive-ness of service provision to community preferences, in-tervene between expenditures and equity. Equity is anattribute of service, tax and expenditure outcomes.

Several unanswered empirical questions are at issue.How do differences amongjurisdictions in a highly differ-entiated local public economy compme to the differencesamong communities or neighborhoods within locRIjuris-

dictions, especially 1- cities? How do fiscal dlsp~tiesamong jurisdictions compare to service disparitieswithin jurisdictions? Moreover, how is this comptisontiected by intergovernmental fiscRI tmnsfem? Whichpattern of organization provides for better trusteeship ofintergovernmental revenues?

Future research should also study both the instru-ments of fisd transfer used by overlapping jtisdic-tions, including state md federal grant-in-aid fomulss,and the performance of provision units that receivefuads. At issue is the ability of both granting sad receiv-ing jtisdictions to focus =sistance on those commun-ities in greatest need. Historimlly, ACIR has closelymonitored metropolitRu fisd disparities. The challengenow is to expand the scope of inquiry to include neighbor-hood disparities within urban jurisdictions in order torender a comparative assessment sad fomdate m effec-tive intergovernmental strategy for addressing both ur-ban and suburbsa equity problems.

Conclusion. No one caa detemine the “correct” or“best” pattern of o~ization for a local public economya priori. Instead of trying to detemine what m idealstructure of metropolitan organization ought to looklike, our efforts should go into studying the “rules of thegame” to help individuals and communities better ordertheir relationships.

REFERENCESElmar, Daniel J,, Cif& ofthePrairti: Tti Metropolti.. Fmtiti andhrtin PoliIks, New York Basic Sooks, 1970.

Rolderie, Ted, “Rethinking Public Service Delivew,” in kbma H.Moore, cd., The E.trepren---~inL.omlGouernmti,Wmhkn@n, DCIntemationd City Management hsociation, 19S3.

Nktien, Willim A., and Mickey Levy, “Cities and %hook A tiefor &mmunity Government in California,” Working Paper No. 14,&rkeley Graduate School of Public Policy, Univemity of California,1914,

Ostrom, Elinor, “Size and Performance in a Federal SFtim,” Pdliu6, No. 2 (epring 1976), PP.SS-7S.Ostrom, Vincent, ud Blinor Ostrom, “Public Goads md PublicChoices,” in E. S. %.=, ed., Atiern.atiws for Deliwring Publk Seru.k: TowardImprod Perforfnnw. Sodden Westview Press, 1978,pp. ‘/-49,

Schneider, M-k, “Fragmentation and the Growth of Government,”Publk Cbti 4S (19S6), pP. 255-6S.

Stivens, hbara, Deliuery of Municiwl Servtis E@titilY, Waah.i“@n, DC U.S. Department of HousinS and Urbm Development,19S2.

Stein, Robeti, and Dolores Martin, “Contracting for Municipal Pub.lic %rvices,” ACIR Working Paper, 1W7.

Whitnker, Gordon P., “Coprod.ction: Citizen Ptiicipation in %I’v-ice Delivew, ” Public Admini8tratio. Reutiw 40, No. 3 (May.June19S0), pp. 240.46.

Ronald J. Oakerson h a Senior Analyst atACIR. This article was baed on two forthcom-ing ACIR Reports: The Organization of LocalPublic Economies and Understanding Frag-mentation: A Study of Metropolitan St.Louis.He wos assisted in preparing the article byAnalyst Gary M. Anderson.

Intergovernmental PersFtive/Summer-FaJl 196725

State-LocalPanels:

AnOverview

Michael Tetelman

The age of “fendfor yourself” federal-ism has forced states to reassess theirpolicies toward local government. Assuggested by the National Conference ofState Legislatures (NCSL) Task Force onState-Local Relations late last ye=

One of the m~or challenges facing the states isto fmd ways to help Iod guvernmenk withoutnecesstiy incurring heavy financial burdensfor the states . . . . We believe that state-led or-ganizations can play a pivotal role in studyingand resolving local problems.

Thirteen years agrJ,when the Advisory Commissionon Intergovernmental Relations (ACIR) tirst suggsstedthat states create their own intergovemmenti panels,there were only four in existence. Today, there are 25state counterpart organizations, and over a dozen otherstates have proposals under consideration.

These state-local commissions fall into three struc-tuml categories the ACIR “model,” the local advisorypanel, and the legislative organization. These agenciesexhibit a tide variety in structure, purpose and achieve-ment. Eighteen have been established by stitute, andtive have been created by executive order. Two are “pri-vate” o~izations outside of state ~vemment. Sti-ing patterns range from part-time or loaned services to acomplement of 20 fall-time employees. Fmrding patternsalso vary greatly-from no appropriation to over $1 mil-lion.

This tiicle highlights the structural variations anddescribes the diversity of topics that these commissionshave addressed. The wide range of accomplishments re-veals the tremendous potential of an organization to fa-cilitate state-local relations,

State ACIRa

Stite ACIRS are markedly disparate and broadlybased. There are currently 18 panels which follow thestite ACIR pattern: Connecticut, Florida, Iowa, Louisi-ana, Massachusetts, Minnesota, Missouri, New Jersey,North Carolina, Ohio, Okl~oma, Pennsylvania, SouthCarolina, Tennessee, Texas, Utah, Vermont md Wash-ington. Although not all of these state or~izations usethe acronym, they generally follow the membership pat-tern and scope of work set out for a stite ACIR. Thirteenof the commissions have been established by statute,while fom have been created by executive order and one(Pennsylvania) is a nonprofit corporation.

The average size of Me state ACIRS is 22 membeWMassachusetts has the largest with 39, and Ohio has thesmallest at 13. The membemhip profile exemplifies thediversity in state outlook and needs. For e~ple,Washington’s ACIR includes the state’s Dire&or of In.dian Affairs, and special districts are represented inSouth Carolina and Texas. State and local education in-terests are represented in 11 states, and town and town-ship officials are membem in four states. Federal inter-ests are represented in two states: two federal agency of-ticials serve on the Texas ACIR, and the eight membersof the congressional delegation (or their representatives)have been named to the Oklahoma ACIR.

State ACIR funding and sti]rrg patterns also vary.At least nine of the organizations have a specific appro-priation, and eight have fall-time stnff, The remainder ofthe ACIRS rely on staff and receive administrative sup-port from other agencies (such as a department of com-munity Maim). For example, the New Jersey panel, awell-established ACIR, has an appropriation of $221,000and a seven-person staff, while North Carolina currentlyhaa a budget of $5,397 and one professional staff mem-

26 Imsfgovsrnmmu Pmpsctive/Summr-Fall 19s7

her. Texas, through a combination of a state appropria-tion, publications safes, and grants and contracts, has aFY 1987 budget of $703,768 and a 12-pemon sM. ThePennsylvania council relies solely on grants and con-tmc~ to underwrite its $550,000 budget and staff of ten.The South Carolina ACIR, with four staff membem, re-ceives half of its $239,000 budget from a state appropria-tion and the other half from state-shared revenues to cit.ies and counties.

Because of their broad representation and generallyflexible revenue sources, state ACIRS have been able toaddress a wide variety of issues and problems, and per-fom five major roles: (1) acting as ombudsman; (2) con-ducting technical tminin~ (3) serving as an informationclearinghous~ (4) fommlating reswck and (5) rscom-mendmg policy.

In the ombudsman role, Washington’s ACIR has per-formed admirably. In 1966, the ACIR successfully medi-ated a dispute between tbe state Department of Laborand Industries and the local government usocistionsover workers’ self-insumnce. Florida’s ACIR dso hasbeen an active coordinator, sponsoring forums with theCenter for Policy Studies at Florida State Univemity todevelop comprehensive information on local govern-ment issues.

Technid training assistance has been one of theSouth Cmolina ACIRS stmngpoints. In 1935, the ACIRsponsored a conference in conjunction with the Univer-sity of South Carolina as part of a tmining program forlocal off]cials. The Texas ACIR publishes a guide to statelaws for tit: off]cisls, and the Pennsylvania council con-ducts training and technicaf assistance pmgmms forstate agencies.

A number of shte ACIRS maintain extensive databases. For example, Taxas has established a business/in-dustcy data center to assist economic and developmentspecialist. The Tew ACIR afso has coordinated tithTexas A&M and the University of Texas to collect dataon demographic and dtuml changes. Florida maintainsa general data base on financial information, rangingfrom local government finances to outstanding bond is-sues. The Pennsylvania council has developed a databasefor an early warning system to detect locnl fiscal stress.

Undertaking research and subsequent policy recom-mendations most clearly shows the divemity, common is-sue areas and impact of the state ACIRS. Several organi-zations have produced in-depth inf=tructure reportscovering such broad topics es street and water systemimprovement (Iowa) and innovative fimmcing tech-niques (South Carolina). Examples of commonly sharedpolicy concerns include tort refom and liability insur-ance (Florida, Iowa, Minnesota, Missouri, New Jemeyand Texas), the impact of the decline in federal aid on lo-calgavernments (Florida, Missoti, Pennsylvania, SouthCarolina and Tennessee), home rule (Connecticut, Flor-ida, Iowa, Missouri, New Jersey, South Carolina andWashington), ad state mandates (Florida, Iowa, New

Jersey, Ohio, Pennsylvania, South Carolina and Ver-mont).

State ACIRS also have responded ta more special-ized needs. One such area of concern is waste disposal.For example, the Texas ACIR has worked with the stateNuclear Waste Programs O~ce and the Texas hw-Level Water Disposal Authority to implement effectivelocal government relations. In 1985, Washington’s ACIRcoordinated with the state Department of ECO1OOto de-velop guidelines for -te disposal facility operation andmanagement. The recommendations were incorporatedinto legislation, passed the legislature, and were signedby the guveruor.

In 1985, Missouri’s Commission on Local Govern-ment Cooperation made recommendations on liabilityinsurance which led to passage of legislation forging thePublic Entity ~sk Management Fund. This fund enablesMissouri’s local guvemments to obtain liability coveragethrough a s~te-administered insumnce pool program.The Tennessee ACIRS 1986 series of tax studies led tothe equalization of taxing districts, improvement in ap-pmisal ratio studies, and development of a current valueindex. New Jersey’s Commission on County and Munici-pal Government developed le~slation authorizing mu-nicipalities to allow comties to construct flood controland stem dmins of any type they choose.

Stste ACIRs’ success in recommending policy mder-scores the national ACIR observation about the differ-ence in impact muong advisory organizations: This dis-tinction-between commissions which are broadly rep-resentative and have the resowces to initiate policy rec-ommendations, perfom research, and follow up on rec-ommendations, and those which serve only as a fommfor discussion of intergovernmental issues raised pri.marily by local officials-is the most impofit differ-ence between cwent state o~izations.

LocalAdvlaoryPanelaThe three local advisory groups are fairly unifom in

membemhip and p~ose. Their members are predomi-nantly lod representatives, and their primary focus isadvising the governor. The Virginia Local GovermuentAdvisory Council is a statutory agency chaired by thegavemor. The Maine Municipal Advisory Council is anexecutive order agency whose cbsiman is appointed bythe goveraor. The Michigan Council on Intergaveramen-tal Relations is an organization created by a contractualagreement among the four lod guvemment associa-tions, and the chairmanship is rotated annually amongtbe o~izations,

The average size of the local advisory bodies is 15members, with a high of 26 in Virginia and a low of eightin Michigan. The Maine panel has 12 membem. Staffsand finding are relatively modest. Maine’s advisowcomrcil liaison, for example, is the Commissioner ofTransportation, and members’ expenses are paid bytheir respective associations. Michigan’s council utilizesstaff from the four local government associations, as

Intergovemmenti Per6ptive/Summer-Fa!l 19s7 27

needed. Each organization also is assessed an equal share Each of the panels has staff and budget resources,to underwrite expenses. Only the V]rginia council has an ranging from one staff person and a $5,OOOannual appro-assigned staff person and a spec~lc state appropriation priation in South Dakota to a 20-person staff and a($10,000). bud-t of about $1 million in Illinois. The Illinois budmt

Local advisory bom-ds perform a vital service-toprovide a forvm. They serve as a “local voice” in discuss-ing abroad range of specific issues such m tition, edu-cation, sockd services, land use, zoning, solid waste dis-posal, community development and the environment.

Each of the panels has been successfti in bringingat-tention to issues mrd problems of importance to localgovernments. Yet, the very design of these panels makesthem somewhat limited. Their stmcture does not tekeinto account an incrwingly important participant in theintergovernmental system—the stite legislature. And,the availability of only very modest staff and financial re-sources militates against their being able to undertakeany long-term or sustained project or activity.

LeglsletlveOrganizationsAll four of the legislative organizations are

statutorily based agencies of the state legislature. The 11-linois, Maryland and New York panels are comprised en-tirely of legislators, with equal representation from eachchamber. The South Dakota commission is a ‘perma-nent committee” of the Legislative Research Cormcil andincludes four local government officials.

incl~des support for a four-person SM in the legi~la-ture’s Washington, D.C. off]ce.

As legislative entities, these organizations are wellpositioned to have an important role in their respectivestite’s policymaking processes. Each panel has ad-dressed and proposed recommendations on a wide vari-ety of topics—from day we to housing and from annexa-tion to federal aid. Two of the commissions, in Illinoisand New York, also have developed extensive fiscal databases.

For example, Illinois’ commission has conducted ex-tensive analyses of federal ~ts, state mandates andeducation. The commission also has sponsored confer-ences on issues ranging from child care services to af-fordable housing. Their recommendations have resultedin wholesale changes in such mess as child protection en-forcement (1981-84) and hazardous ~te (1982-83).Recommendations from New York’s commission led tothe 1985 enactment of significant revisions in the localgovernment gened purpose aid program. The New Yorkpanel also has issued a number of extensive studies focus-ing on the delive~ of lod services, developed a catslogof federal and state aid programs, and sponsored several

28 Imsreovsm- PerspscUve~-Fdl 1%7

statewide conferences and seminars. The Maryland com-mittee prepares mr annuaf summary of major legislativeproposals, monitom congressional and federal adminis-trative developments, and has assumed the role of theformer intergovernmental cooperation commission ininterstate mattera. The South DAota commission hasstudied such diverse issues as home rrde, which led to theadoption of a constitutiomd amendmenb payments in-Iieu of taxes and the classification of stite park and gamelands; cow clerkc’ salaries; rml property valuatio~ daycsre services and annexation, which resdted in a com-plete overhad of the stste’s mrnexation process.

While three of the panels (excluding Maryland) haveno formal mechanism to involve state executive oficids,the Illinois, Maryland mrd New York pmrels have begunto include local off]cials more actively in their delibem-tions. The New York commission utilizes a ‘workinggroup” of the local associations as a sonndingboard to re-view and comment on research projects, and regularlycontributes articles to these associations’ newsletters.Tbe Illinnis commission publishes a newsletter, is re.sponsible for the state’s block grant advisory committee,and regularly utilizes local oficials m advisors tn thecommission.

In response to a measure spnnsored by the Marykurdcommittee, a ststutn~ advisory group has been rwcti-vated and reo~ized tn involve both state executiveand local government officials, and to focus specificallyon state-lncal relations.

Conclusion

The nature of today’s federalism debates and globaleconomy place even greater emphasis on the need forstrong state governments and a sound state-local part-nership. State ACIRS and similar types of in-tergovemmentaf panels, demonstrating continuity, ca-pability and ever-increasing credibility, have a very nec-essary rnle to play during this critical period fnr gover-nmentsat all levels, and will continue to have a positiveeffect on state-local relations.

Michael Tetelman is a student at Yale Urziuer-.si&, and served as an ACIR Intern during thesummer of 1987.

Intergovemmentsl Perswtive/Summer-Fall 19S7 29

MICROCOMPUTERDISKETTESERIESState-Local Government Finance Data–These diskettis developed by ACIRpmvide ~eSS toCen.

sus finance da~ in a fmmat not previously atilable, wd are daigned for ease of use. State-by-stab data for66 revenue end 70 expenditure claasiOcations, popdation end pereoneJ income era included on each two-disk-ette set for stite and lod gevernmenta Cemblned, state gevemrnent only, or all 10CSIgovernments (w~ted at the stite level—see below for dab on individti cities and counties).

Formati bti 1-2-3 or Symphony

PricIx $150 (three-year set), $80-FY85, $60-FY84, a25-FY8S; FY88 available December 1967.

Government Finance Data for Individual Cities and Counties–me data areavailableforsubstantiily SD cities over 25,000 poptition, all counties over 50,000, end selected counties between 25,000and 50,000. All data are for fiscaJ 1984. Each ~-dkkette set contains data for popufatien, 62 typw of gmeralrevenue, 30 types of general expenditorm, focr categories of debt, 14 revenue and expenditure mtegories of10CSI3Yoperated government utilities, and seven categories of Iocsl retirement system fwces. The diskettesmay be purchased by region ores a 12-region set es fo~ow

New England (Comecticut, Maine, Massachusetts, New Hampshire, Wode Island, Ver-mont—l 17 cities, 37 couties)

Mideast (Delaware, Washington, DC, Marylend, New Jersey, Pennsylvania-103 cities, 65counties)

New YorkState (76 cities, 49 counties)Great Lakes I (Michigan, Ohio–122 cities, 101 cormties)Great Lakes fX (fOinois, Indiana, Wiscensin-157 cities, 133 counties)Southeast I (Kentucky, Tennessee, Virgia Wwt Virginia-41 cities, 137 wrmtiw)Southeast II (Geergia, North Camlirm, South Csmlirm-98 cities, 158 emmtiea)Southeast III (Alabem& Arkansas, Florida, Leuis@ Mississippi—40 cities, 138 counties)Pleine (I% Kansas, Minnesota, Missouri, Nebraska, North Delco% South Uoti-78

cities, 114 Ccrmtiee)Southwest (.4rizou New Mexico, Oklahoma, TSXSS-94 cities, 117 ceunti-)*3w MosmtainEar West (Colorado, Idaho, Men% Uti, Wyoming, Neva@ Oregen,

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Just ReleasedState Government T= Revenue Diskette. ~83-86 -TO a conaidersble extent, the Stati

Government Tax Revenue Dkkette contains the same revenue fields as the State-Local Government Fi-nance Diskettes described above. However, the State T= D&ette ia distinct from the state-locsl series inthe foflowing ways: 1) Tax data on state govemmenta are released by the U.S. Bureau of the Censusappm*ately six mOnthS priOr to the entire government finance series (which includes vsrioua categories offederal aid, user charges, miscellaneous general revenue as wefl aa tax revenue and ~nditure data). TfIeState Government Tax Diskette makes the atate tax portion of the government ftiance ser’iea aveilabk tothe public a half of a year earlier than entire state-local government finance series. 2) Because the dnta baseon the State @vemment Tax Diskette ia smaller thsn on the state-local government finance aeriea, fouryears of data (*83-86) are included in a single diskette. 3) Urdike the state-kcal finance series or we ~~cfty-counties series, the State hvemment Tax Dukette does not contain any information on local govern-mnta nor does it contain any expenditure data.

state ~aX ~eSOUfCeS and ~tiiiZatiOn–This series is based 011the dati.sed to produce ACIRS smmslpublication Tax Capacity of the States (also called the Representative Tax System, or “RTS” for short).The disks, which contin data not published in the nmmrd report, permit users tn monitor cbsn8’as in tax bssesand revenues, compare aad contmt states’ rates, md prnject futnre revenues. The data bsse includes thedollar amonnt of the stite-locel tax base, stite-local & collections, statutory state ti rates, and effectivatirates. Data for selected years are presented for five other indices. Most data covers 1981-M.

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Financingthe

Nation’sHighways

On M=ch 20, 1987, ACIR approved three recom-mendations pefining to highway financing. The recom-mendations dl for (1) stabilizing federal highway fi-nancing as an immediate ga* (2) improting stite-localcooperation in highway planning md financing as an in-termediate gad and (3) devolving all non-Interstate,federally aided highway prams md revenue bases tothe stites as a long-mge goal.

ACIR hw just rel~ed its policy report on the sub-ject-Dmoluing Selectsd Fedsral-@ Highway Pro-grams and Rsvenue Bases:A Critical Appraisal. Accord-ing ta the report, written by M=k David Menchik,turubacks-the simultieous devolution of a fede~ re-sponsibility to states md localities along with the relinq-uishment af a federal revenue base-are a potentiallypromising mechanism to decentralize the American fed-eral system md to achieve a better msignment {i.e., a“sarting out”) of responsibilities and revenues ta individ-d governments.

ACIRS research on questions of decentralizationand sarting out revenues and responsibilities goes backmore then a decade, and the Commission recently en-domed turnbacks in a general way. In its 1986 report De-valuing Fe&ml Pragram Rssponsibilitiss and RsvenueSources to State and Lacal Gavemwti, ACIR sug-gested criteria ta msess sorting-out mechanisms, estab-lished principles for program tumbacka, and exmninedthe choice of revenue bases to be given to stite and lodgovernments. The 1986 report also raised certain con-

terns and suggested further consideration of thetmback concept before its implementation. The cur-rent report is a further exploration of the concept, Fol-lowing are excerpts from the Introduction to the repart.

Highways were considered an appsafing possibilityfor tmbacks because state and local governments al-ready finance many important ready indeed, these gov-ernments plan, build and operate essentially all thestreets and roads in the natian. The devolved roadswould be financed-as most roads are-by a b on mo-tor fuels, in this case a share of the current federal taxbase. Wltb state and local @vernments freed from fed-eml requirements, some of which are unsuitable and ex-pensive, turnbacks offer the possibility of more flexible,mare eff]cient and more responsive financing of thoseroads that are of predominantly state or local concern.Investment in highwys could be matched more closelyto travel demand md to the benetits received by the com-mmities served by particdar roads.

However, given that some very impo~t benefits ofthe nation’s higbwsys are national in scope, it is impor-@t to consider which highway functions are most ap.propriate for devolution. At the same time, given the ma-jor role the fedeml gavemment has played in highway fi-nance since 1916, as well se the complex interplay be-tween state and Iomd highway cancems, any movementtoward road md highway devolution must proceed withcare and deliberation.

Highway turnbacks potentially can add bath cer-tainty and flexibility-as well as efficiency and account-ability—to the financing of the nation’s transportationinfrastructure, as well as to the design and operation ofboth new and maderuized roads. Tumbacks can improvemore tha roads. They offer m opportunity to reform animportant component of tisd and political fedemlism.Decentmlization of specific highway pragmms w aIsobe part of a lsrger “sorting out” of pmgmm responsibili-ties that wodd focus the attention and funding of the fed-eral government on those national transportation issueswhich it is best qualified to address.

Anyturnbackpmposal must answer some importautquestions, however, because highway tumbacks wouldsignificantly change the political and fiscal authority forroads, not simply alter highway financing. For exmnple,the flexibility of funding and pro- operation thatttibacks wotid effect m-s that some states might notmaintain existing spending priorities. A stite gover-nmentmight cut spending so much as to reduce tbe level

32 Imovsnrmnta! PersFtivs/3umtrIsr-F@l 19S7

of highway services (despite eff]cien~ improvements),psrticufarly if the state faced hard times or a tightbudget. Under the present federal matching @ts,state-local funding is matched at a very favorable rate—at Iwt three federal dollm for exch state-local dollar.This matching rate provides a strong incentive to con-tinue the state-local contribution. Similarly, if state-pro-vided highway funds were cut, or if urban transportationor lod growth concerns were given short shrift in a statehouse, a tumback might stmin state-local relations.

A separate staff report on highway issues was devel-oped as a resuft of concern over the third ACIR recom-mendation—devolving afl non-Interstate fedemfly aidedhighway programs tQthe states as a long-range goal. Thisrecommendation wxs approved with the understidingthat, to be effective, it wmdd require that state and localgovernments address important issues of stxte-local re-lations in highway planning, financing and construction.NationaJ public interest groups representing lod offi-cials expressed concern to the Commission that stategovemmentx wodd not be fuflyresponsive to 10CX3roadand highway needs after devolution.

As a first step in exploring the fexsibifity of imple-menting the devolution recommendation, ACIR stxffconducted a preliminary investigation of state-local rela-tions and of the degree and qtiity of consultation andcooperation in highwxyplaning, financing and construc-tion.

A questionnaire was mailed to the directors of all 13state associations of towns and townships, 49 state mu-nicipal laagues, 47 etate associations of counties, and 38state associations of regional councils. The resrdts of thesurvey ware issued in heal Perxpectioes on State-bcalHighway Cowdtntion and Cooperadon: Swvey Re-qonses fmm State ksoctions of heal Ofiin.!a. Thetntaf response rate was very ~od—75.5 percent. Of 147questionnaires mailed, usable responses were receivedfrom 69.2 percent (nine) of the town and township direc-tors, 67.3 percent (88) for the state municipal lexgues,76.6 percent for the county associations, and 66.8 per-cent (83) of the regional councils associations.

The resufts of the survey are not intended to be de-finitive, but to gauge the climate of stxte-local relationson highway matters. The smey suggests that there is,for the most part, a satisfactory climate of cooperationand consultation. Genemf tindings are as follows:

Highway issues are as important as other issues;

State oficials consult with Incxf otlicials oftenenough

Federal offlciafs do not consdt with local off]cids onhighway matters very often,

Stxtes frequently require regioria.l but not necessar-ily Iocaf approval of highway projecty

Stxtes generally notiiy Iocaf oficials before initiat-ing projec~,

Stxte off]ciale involve lod officials somewhat ac-tively in planning

Locxf off]cials can usually influence state off]cials tomodify projects;

Local officiafs are less likely to be able to convincefederal officiafs to modify pmje~;

Local offlciafs are somewhat-to-very satisfied withstite-lod consultation procedure

Many local off]cials woufd prefer mom consdtatio~

State-local cooperation is rated good to fair

The level of stxte-locaf highway cooperation has im-proved slightly during the last rive yaars;

A transfer of fedemlly aided highway progmms tostates woufd not resrdt in less overall state high-way spending and Iocxl areas woufd often dobetter but rarely do worse under a highway“tumback.”

h sum, a ganemfly good foundation for state-localhighway consultation and cooperation exists in most ar-w of the nation. Afthough there are state-locaf relationeissues to be dealt with in the implementation of anytransfer of fedemf-aid highway pm-s to the states,the environment in most stxtes appaars to be conduciveto addressing these issues.

Devolving Selected Fe&ral-Aid Highway Pro-grams and Revenue BaxeE: A Critical Appraisal.Report A-108, September 1987,68 pagas, $10

bcal Perspective on State-Local Highway Con-sdtation and Cooperdiow Sur-uey Respomsaporn State .-txnociationx of heal Oficials. ReportSR-4, Jdy 1987,48 p~S, $5.00

(See page 39 for order fomr.)

Intergovernmental PersWtivo/Summer-Fall 198733

The Return toFend-for-YourselfThe Reagan Mark

Federalism:

Introduction

when compmed with the statesof other mq”or democmtic federa-tions—Austmlia, Canada and WestGermany-berican state gover-nmentsoperate in a fsirly harsh mdpolitically risky fend-for-yourself tis-cal entionment. While the long roadto strnnger sate revenue systems inthe United States haa been pavedwith the politi~ bones of formergovemora, state off:cia.ls in the otherm~or federations have been moresuccessful in enlisting the help oftheir central governments in raisingrevenue.

= The Austmlim states derive

●

■

most of their revenue from un-conditional federal grants nego.tiated periodically by federnl andstate policym~em.

Most of the revenue that flowsinto the coffers of the Germanstites is the product of tax shari-ng arrangements worked outwith the centd government inBonn.

In the not-so-distit psat, theCanadian provinces SISOreceivedpowerfd revenue mising sasis-tice from Ottiwa in the form offull tax credits (politid heatshields) that permitted the prov-inces to re-enter the income kfield tier World War II at virtu-dlv no noliticaJ risk to their. . .elected lm.dera-an innovativefedeml-state tax sharing pro-

m.The distinctive “fend-for-your-

self” brand of American fiscal feder-alism is also uderacored by the factthat not even the poorest statea in

nur Uninn receive sDecid helD from. ..Washington. This hands-off Apolicywith respect to interstate equaliza-tion stands out in sharpest contrastto the Austmlian, Canadian, andWest German policies that providespecial (eqdizing) aid to theirpoorer states.

Three DletlnctlveFeetures

The Ameriw bmnd of fedeA-ism is marked by diversity, competi-tiveness, and resiliency, and the

- Administration’s contribu-tion boils down to this—it has helpedgive ovr pre-Grsat Society bmnd offend-for-youself fededism a newlease on life.

Diversity-Providing Choiceswithin the System. Because sI1stites snd most localities must misemost of their revenue, there are greatvtiations in state snd local tax mdexpenditure policies in the UnitedStates. These fiscal differences–which provide rml choices for citi-zens and business firms-are foundin all regiona of the couutry.

In New England: New Hamp-shire haa neither a broad-bssed per-sonnl income tax nor a geneml salesk, md lms heavily, therefore, onthe local property tax. The neighbor-ing states m~e use of all three ofthese revenue producers.

In tk Mid-Atbntic Re@’on:State and local expenditures (percapita) for New York are far aboveavemge, while Pennsylvania’s expen-ditures are definitely below the na-tionnl averuge.

In th Grsat hhes Region:There is a real difference between theprogressive tax policies of Minnesota

John ShannonExecutive Director

and Wisconsin and those of the moreconservative stites of Illinois and In-diana.

In the Far West: An interestingchoice exists between WashingtonState, where voters have repeatedlyvoted down an income &, and Ore-gon, where voters me strongly op-posed to a sales tax.

A Striking Interregionnl Differ-ence: New England states makeabove average use of the property taxand place heavy emphasis on locslcontrol. In contrsst, southern s~tesmake rather anemic use of the prop-erty tax snd favor more centmlizedstate tinancing.

These great differences @ betraced l~ely to three factom. (a)widespread variations in fiscal capac-ity, ~) substantial differences in vot-em’ tastes for both public servicessud ties to support them, and (c) afederal hands-off tmdition with re-spect to equalizing intergOvemmen-tal fiscal disparities.

These great state and 10CSIfiscslvariations are viewed quite differ-ently by liberals md conservatives.Liberals often view these fisd differ-ences as disparities, and d] forequalizing federal and state actions.Most conservatives tend to viewthese variations as diversities thatshould not be wiped out by redist-ributive federsl sud state actions.For the supportem of decentralizedgovernment, one of the toughest pol-icy issues is this: When does a “gooddiversity” become a “bad disptity”that necessitates comective fedemland/or state action?

However one views these vmi-ations, one thing is cleur-state and

34 IntargovammantalPmpacUva/Summaf.Fall 19S7

lod boundaries do make a differencein the Amerim federal system. Inthe United States, ‘You pays yourmoney and you takes your choice.”

Competitiveness—Stabilizingthe System. If diversity is one of thehallmarks of Arnericen tisral fedeml-ism, what prevents our 50 state-ledsystems from becoming too diverse?Again, the qnick aaswec Competi-tion for jobs and economic develop.rnent appears to be an impotit fac-tor in preventing our stites fromdrifting too far apart.

The 50 state-local systems be-have mnch like ships in a naval con-voy. Secause they are spread out overa -t area, there is considembleroom for each state to maneuverwithin the convoy. Two considera-tions prevent a state from moving outtoo far ahead or lagging too far be-hiud.

1. If a state moves out too far aheadof the convoy on the tax side, itbecomes increasingly vulnerableto k evasion, taxpayer revoltsand, most importantly, to taxcompetition for jobs rmd invest-ments from other states.

2. Ifa state-local system lags too farbehind the convoy on the publicservice side, it becomes incr--ingly vulnerable to quality of lieand economic development con-cerns-poor schools, poor roadsmrd inadequate support for high-tech operations.

It shodd be noted that this com-petition issue is given different spins.Conservatives are more apt to focnaon the price (tax) side of the competi-tion coin and warn that high b lev-els in general and highly progressivetax policies in particdar can drivefootloose ripper-income taxpayersand businesses to jurisdictions withmore salubrious k climates. Thereis no doubt that this message is nowmnsing mrmy of the northern liberalstates to scale down sharply theirprogressive b rates. In the last twoyears, New York, Wisconsin, Minne-sota, Delaw and West Virginiahave pulled their top personal incomeb rates down from the double-digitcategory into the single-digit range.

Libemls, on the other hand, aremore inclined to play down the im-portance of state and local taxes inbusiness lomtion decisions, and focusinstead on the public service side ofthe competition coin. They contendthat good schools, well-financedphysical infmstmcture and qnality oflife amenities figure importantly inthe value systems of high-techpolicymakera. There also is no doubtthat these concerns are mnsing somelagging stites to upgrade their educa-tional systems.

This competitiveness factorpoints up another distinctive featureof Ameriran tiscal federalism. Theother m~or federations provide spe-cial assistance to the poorer states tokeep interstate b and spending dif-ferentials from becoming too great.In the United States, however, werely on intefitisdictional competi-tion for economic development toperfom this stabilizing role—simd-tieously forcing high-tas states toslow down, while prompting low-spending states to accelerate on thepublic service side of the ledgsr, espe-cially for edumtion and physiml in-frastrnctwe.

This federal hands-off policywith respect to interstate fiscalequalization will come under increas-ing criticism now that the poorer re-gions of the nation are no longerslowly closing the rich state-poorstate gap, ss they did between 1929and 1979. In fact, since 1979, that gaphaa slowly widened because theweatthier states located in New Eng-land and the mid-Atlantic regions areonce again growing at a faster ratethan most states in the other re8ions,especially the south. Without outsidehelp, can the poorest states and lo-mlities be competitive? This issueposes another tough equity questionfor fend-for-yourself federalists.

No matter how the eqnity ques-tion is resolved, one thing appemfairly certain-the competition issueis not going to go away. In fact, com-petition for jobs and investment dol-lars is likely to become increasinglytierce because: (a) the U.S. economyis becoming more and more open toglobal competition and (b) the recentand sharp cuts in federal income tax

rates have substitially reduced thevalue of sate and local tax deduc-tions on the federal 1040. This devel-opment, in turn, is bonnd to increasethe sensitivity of upper-income tax-payers and business fires to inter-state mrd interlocd ti differentials.

The memory of the taxpayers’ re-volt and the squeeze on the federalbud~t also put a keener edge on in-te~nrisdictional competition for jobsand economic development. In thepOst-PrOpOsitiOn 13 era, mqjor taxhikes are still quite risky and theprospects for more aid from Wash-ington are almost nil. Thus, thegrowth in the h base generated byeconomic development stmrds out asa most attractive method for revenueenhancement. It shonfd also be em-phasized that bringing in new jobsmd retaining existing jobs are be-coming two of the most impotittests ofa successful state or lod ad-ministration. In view of these politi-cal realities, it is highly mlikely thatmany govemom or mayors would bewilling to sign nonaggression pactswith their comrterptis in neighbor-ing jurisdictions.

Resiliency-Keeping the Sys-tem Going. Now for the third dis-tinctive feature of Ameria feded.ism—the resiliency of state and loca3governments. In my judgment, themost underrated feature of onr fed-eral system is clearly the demon-strated ability of our 50 stites andthousands of localities to absorb andthen to rebmmd from regionaJ andnational shocks.

The fiscal resiliency of the 50state systems cmI be easily docu-mented. Since 1978, the 50 state-lo-d systems have absorbed the shockof the three W:

Reuolt of the taxpayers-Proposi-tion 13, et al.

Recession—the 1981-82 economicdownturn, which was the sharp.est since the Great Depression.

Reduction in federal aid flows.

More recently, many of thestates have been hit hard by regionaldownturns. The farm states havebeen pinched severely by the agricul-tural recession and the ener~ statesof the southwest have taken hard hits

lntergovernmenIal Perspective/Summer-Fall 19S7 35

from the sharp drop in oil prices. Yet,despite all these shocks, the states =a collectivity are doing far betterthan most students of state and localfinance would have predicted a fewysars agu.

The resiliency of our 50 state.lo-A systems also comes throughclearly when the fiscal fortunes of thefeded government and the statesare compared over time. If a modemRip van Winkfe had fallen into a deepsleep at the end of the Korean Warand awakened recently, he wodd notbelieve the changes that have trans-formed our intergovernmental sys-tem. By the 1950s, the feded gov-ernment towered over the states arrdlomlities, its revenue system mas-sively strengthened first to combatthe Great Depression and then to ti-nance World Wm II and the KoreanWar. While Washington appeared allpowerful, the states were being de-scribed as the “fallen arches” of theAmerimn federal system.

Now, the states and localities areboth playing the activist roles in edu-cation and welfare reform, and col-lecting well over one-half trillion dol-lars from their own resources. Evenmore surprising to the modern Ripvan W]nMe, however, wntid be thespectacle of the feded governmentmired down deeply in massive budgatdeficits berause the Congress andPresident _ cannot agree on abudget balancing strateo.

Although the divemity and com-petitiveness features raise equityquestions, the resilience of states andlodlties poses no such problem. Theability of states mrd lod]ties tobouuce back is both an unqualifiedvirtue and the most significant fea-ture of Anrerisa.n fiscal federalism.

The ReagenMark

The creation of a tisml environ-ment that forces stite and Iod offi-cials to become more self-reliantstands out as the primary impact theReagan Administration has had onour federal system. Three develop-men~ support this verdict.

= Federal aid as a percentage of to-tal stite-local outlays hasdropped from 25% in 1981 to an

estimated 19% for FY 1987.Lfore significantly, this do\vn-ward trend (which actuallystarted in the latter half of theCarter Administration) reversesthe lnng 1955-78 AftluentiGreatSociety trend in which federalgrants grew at a consistentlyfaster clip than did state-localown source revenue. (See Exhibit1.) As noted earlier, in 1987, stateand Iod gnvemments will col-lect from their own sources wellover one-half trillion dollu—about five times the ~ount thatthey will receive from Washing-ton.

■ The fedeml government did notprovide countercyclical aid whenstates and localities were but-feted in 1981-82 by the sharpesteconomic downturn since theGreat Depression, nor has thefederal ~verument providedspecial aid to the state and lodgovernments in the farm stitesseverely pinched by the agricul-tural recession or to the stategovernments to the southwesthard hit by the dmmatic drop inoil prices. * This hands-offReagan policy not only standsout in sharp contrast to the coun-tercyclical action taken by previ-ous administrations, it also sendsup a powerfd fend-for-yomelfmess= to the states. Over halfof the states have now createdtheir own “rainy day” funds tohelp cushion the shock of an eco-nomic downturn.

■ The Reagan Administration hasalso maintained the traditionalfederal policy with respect tothe poorest states-no special(equalizing) aid. Moreover, citingthe federal budget squeeze, thecurrent Reagan Administration

●While tie federal government W= unwillingh prop up sagging stiti and local revenues inthe farm belt, it w willing tn shore up thesagging income of many farmem. F~m “sta-bilization” tid rose from $9.8 billion in 1981ta $29,6 billion in 1967, ~us, statis and lo-Aiti- in the farm belt region were at leastindirect beneficiaries of this “bubble up”form of co”ntircyclical aid.

:;,~shed successfully for the elimi-nation of the Geneml RevenueSharing Programs for locali-ties—an unconditional a,ssis-tice program with some equal-izing power.

The determination of the ReaganAdministration to shift more tinanc-ing responsibility back to the statesand localities received powerfti sup.port from the three Ds—deticits, de-fense and demo~phics (social secu-rity rmd medicare). These three fed-eral budgetary realities of the 1980swould have made it dificdt for evena President Lyndon Johnson to main-tain-let alone expand-the federalfiscal presence on the state-localfront.

This gradual decentralizationprocess is not the neat, orderly andswift sorting-out process for whichreforruem yearn. Nor does it resem-ble the prow swap and taxturnback proposals the Reagan Ad-ministration advanced in 1982 forachieving a more orderly and decen-tralized allocation of responsibilitiesbetween the national governmentand the 50 state-local systems.

Nevertheless, fend-for-yourselffederalism is slowly effecting a “sort-ing out” of sorts. Federal policymak-ers are being forced by fiscal and po-litical realities to allocate an incrsas.ing share of their resources forstrictly national government prO-ps defense, social security, Medi.me, and interest on a $2.4 trilliondebt.

To sum up, three sign~lmtchanges have emerged from the in-teraction of the federal budget crisisand the Reagan decentralist philoso-phy.

m A sea chan~ has occurred in the

expeditions of state and Ioml of-ficials-when forced to searchfor “new money,” they once againlook to their own resources.

■ The recent burst in state activ.

ism and the remarkable demon-stration of stite-loml fisd resil-ien~ m be attributed in nosmall part to this return to fend-for-yourself federalism.

36 Intsrgovemmsntal%_Eumw-Fsll 1W7

m Federalism.s no longer worry thatstates and lodities will become“federal tid junkies.”

The Near Future. What is the prog-nosis for this tough bmnd offend-for-youraelf federalism after WnaldReagaII lmves the Presidency? Thisinquiry takes on added significancebecause most of the federal aid pro-

ms (over 400) are still intact, ~-beit in a semi-frozen condition.

In my estimation, the futme ofReagan-type federalism will beshaped more by the financial condi-tion of the federal Treasury than bythe politicaJ philosophy of the nextPresident. Because deep slaahes infederal spending appear highly uu-Iikely, the condition of the federalTraaaury will be largely determinedby whether or not Washingtonpolicymakem gain access to a m~ornew ti-a national sales b or valueadded levy.

The prospects for tinance-it-vouraelf federalism remain fa.irl~

strengthen its revenue system in avery m~or way. In that case, the fed-eral bud~t squeeze will continue forsome time to come and state and lo-cal officials will have no alternativebut to keep on tapping their ownsources when confronted with theneed for additional revenue to fi-nance their own new initiatives.

On the other hand, if Washington@ns access to a m~or new source ofrevenue, then the prospects for thecontinuation of fend-for-yomelf fed-eralism become cloudy. In that caae,the squeeze on the feded budget tillbe relaxed and Waabington shouldonce again be in a fairly good positionto push more funds into the state-lo-cal arena-with more federaJ expen-diture strin@ attached. Why? Be-cause there no longer exists real po-litical and judiciaJ restraints on fed-ed entry into W- once consideredthe exclusive domain of the states.With the withering of all but the fiscalconstraint, more than ever federal-

The F&cent Paat. While a prOgnO-sis for even the near futwe is uncer.tin, the experience of the recent paatis reassuring. The demonstrated abil-ity of elected state and lod Iwdemin our decentdized system to copewith adveraity and to fend for them-selves stands out in sharp contraat tothe rigidity of a unitary state. Thegrmt English historian Thomas Car-lyle described the highly centtilzed@vemment in Fmce on the eve ofthe Revolution aa a regime sufferingfrom apoplexy at the center and pa-ralysis at the extremities. A futurehistorian of American federalismmight well conclude that during the1980s the inte~vemmental systemwas marked by growing fiscal dis-tress at the center and remarkableresiliency at the extremities.

This verdict serves as a most tell-ing argument in favor of our decen-tralized federal system and vindi-cates the wisdom of the framers ofthe Constitution in Philadelphia 200yeara age-that of not placing afl ofour policy ew in Washington’s baa-

~right if Washington fails (0 ism is tinance. ket.

Exhibit 1

The Rise and Decline of Federal Aid. 1958-88

Percent(as a Percentage of State-Local Outlays)

27

25

23 Ai

21

19

17 / J

15 —

13

11

058 63 68 73 78 83 8&

e—estimate. Fiscal Yesrs Sourcti ACIR Staff

Intergovemmenti Perapsctive/Summer-Fdl 198737

Here, from the ACIR back list, is a

collection of publications on federal-ism and politics in the 1980s particu-larly appropriate for the Constitu-tional Bicentennial.

The Tranaformatlon InAmerican Politlcs

By Lhe 1980s it was clear to virtuallyall observers that tbe traditional roleof American political parties hasbeen substantially altered. This re-port suggests that one way of restor-ing constraints in the national gov-ernment is by revitalizing state andlocal political patties. It examinesthe decline in voter identificationwith parties, the proliferation of spe-cial interest groups, the rise of theindependent politician, television’snationalizing influence, the revoh-tion in campaign finance, and thegrowth of the national patties at theexpense of state and local organiza-tions.

(A-106) 1986 382 pages $10(B-9R) 1987 76 pages $ 6In-Brief Version)

A Framework for Studying theControversy Concerning theFederal Courts and Federalism

Many observers have cited a sub-stantial alteration in the states’ posi-tion in the federal system over thepast 50 years through federal courtdecisions that have disrupted theway state and local governments ftd-fill certain functions, e.g., correc-tional systems, mental health care,legislative apportionment, criminalprosecution and defense procedures.This report provides an analyticalframework to evaluate the federal-ism consequences of the effects ofjudicial decisions on state policy.

(M-149) 1986 75 pages $3

Reflections on Garcia andIts Implications for Federalism

This report explores the implicationsfor the future of federalism of theSupreme Court decision in Garcia v.San Antonio Transit Authorily that itwill no longer play “umpire” of tbefederal system, leaving a determina-tion of the precise scope of nationalauthority in the hands of Congress.The analysis examines the broadconstitutional context of Garcia inan effort LO learn what, if anything,has gone wrong in the workings ofthe system with respect to federal-ism. A range of possible state re-sponses and a variety of approachesto constitutional reform are sug-gested.

(M-147) 1986 56 pages $3

Emerging Issues In AmericanFederalism. Papers Prepared forACIR’S 25th Anniversary

The Condition of AmericanFederalism. Hearinge Held inACIR’a 25th Anniversary Year

Since 1959, the ACIR bas pursuedits primary responsibility: proposingways to improve the federal systemthat are based on research, analysisand deliberate consideration by con-cerned participants from many dif-ferent settings. The silver anniver-sary year offered an appropriate op-portunity to give attention to theCommission’s past actions and theirimportance to contemporary and fu-ture federalism. These volumes re-flect the insights and conclusions ofelected and appointed officials, pub-lic interest groups, scholars and citi-zen groups, supplying ample evi-dence that the philosophy and ac-tions underlying federalism–theunique creation of the US. constitu-tions I sys:em—are relevant forAmericans’ lives.

(M-143) 198S 86 pages $5(M-144) 1986 37 pages $5

Regulatory Federalism: PolicyjProcess, Impact and Reform

Beginning in the early 1970s, a newdevelopment surfaced in inter-governmental relations: the emer-gence of a host of regulatory pro-grams aimed at or implemented bystate and local governments. Startingwith an analysis of constitutional andjudiciol perspectives, this volume ex-amines developments in environ-mental protection, elementary andsecondary education, and highereducation.

(A-95) 1984 326 pages $5

A Crisis of Confidence andCompetence

The Condition of ContemporaryFederalism: Conflicting Theories &Collapsing Conatrainta

An Agenda for AmericanFederalism: RestoringConfidence and Competence

These are part of a ten-volume

study—The Federal Role in the Fed-eral System: The Dynamics ofGrowth–which examined the pre-sent role of the federal government;reviewed theoretical perspectives onfederalism, assignment of functionsand governmental growth; and iden-tified historical and political patternsin the de~,elopment and expansionof national government domestic ac-tivities. (The other seb.en voi”mesare case studies of governmentalfunctions. )

(A-77) 1980 160 pages S5(A-78) 1981 251 pages $5(A-86) 1981 188 pages $5

The Future of Federalism in the1980s

At the opening of the Bicentennialdecade of the U.S. Constitution,ACIR believed that the future ofAmerican federalism was as crucial atopic for discussion as it has been at

3a Intergovemmentel Perapactive/Summer-Fall 1987

varlOus points throughout its200-year history. Reviewing funda-

mental principles, this volume asksin what direction we might be ex-

pected to proceed throughout the

decade, ACIR proposed a middle-range approach to reform to relie~,e

the “overloading” of the inter-governmental network.

(hI-126) 1981 136 pages $5

Studiee in ComparativeFederalism

In 1976, Congress asked the ACIR

to study and evaluate the allocation

and coordination of taxing and

spending authority between levels of

government, including a comparison

with other federai systems. These

studies conclude that fiscal federal-ism in the U.S. is less formally strttc-

tured, more fragmented, and conse-

quently less neat and orderly than in

other countries—a reflection of theheterogeneous and diverse nature of

U.S. society and government.

Canada (M-127), 1981, 95 pages,$3: Weat Germany (M-128), 1981,89 pages, $3: Auatralia(M-129),1981, 60 pages, $3: Australia, Can-ada, the US and Weat Ger-many(M-130), 1981, 99 pages, $5.

Intergovernmentel Perspective($3 per issue)

American Constitutions: 200 Years

of Federalism (Spring 1987,

Vol. 13, No. 2)

Federalism in 1987: Challenges and

Choices

(Winter 1987, Vol. 13, No. 1)

Garcia v. San Antonio: Federalism

under Fire? (Spring/Summer

1985, Vol. 11, No. 2/3)

1984 Not a Good Fiscal Year for

“Big Brother, ” (Winter 1985,

VOI. 11, No. 1)

Coming Soon

The Transforrr’ation in Ameri-can Politics: Implications forFederalism—In Briefi B-9, re-vised, September 1987, 76 pp.$6.00

Is now the time for afl goodfederalists to come to the aid ofthe parties? The 1985 SupremeCourt decision in Garcia v. SanAntonio Metropolitan TransitAuthori~ suggests that it is.

The Court held that it is the po-litical processs, not the judici.~ interpreting the Constitu-

tion, that affords states and 10.calities their rights in theAmericnn federal system.Where are the institutionalpressures forcing federal offi-cials to guard the constitutionalrights of the states?

This is an updated sum-mary of ACIRS 1986 study onthe transformation of politicafparty structure and the pro.nounced decline in party influ-ence—especially at the stateand locaf levels—and their ef-fect on intergovernmental rela-tions.

De Facto New Federalism in 1983.(Winter 1984, Vol. 10, No, 1)

The ConstiluLion, Politics and Fed-

eralism,(Summer 1983, Vol. 9, No. 3)

Federalism in 1982: Renewing the

Debate.(Winter 1983, Vol. 8, No. 4)

Perspectives on a New Day for Fed-

eralism. (Spring 1982, Vol. 8,No. 2)

1981: A Threshold Year ror Feder-alism.(Winter 1982, Vol. 8, No, 7)

1980 Spotlights Rebalancing Feder-

alism.(Winter 1981, Vol. 7, No. 1)

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