WP-96-29

Donald Haider

Abstract

Much has been written about New Federalism from the vantage of federal and state governments, but far less on what intergovernmental changes protend for local governments. To assess current and future impacts upon nearly 85,000 units of local government, the author takes a functional approach to what local governments typically do, recognizing that such arrangements differ widely among 50 states and their localities.

In the past local governments responded to augmented demands by generating more resources to pay for new or expanded services. The author finds that traditional resource-acquisition strategies no longer workÑor work well. Federal and state governments alike face a crowding-out phenomena in their spending priorities which increasingly means less support for traditional local governmental functions. State imposition of various tax and expenditure limits (TELs) vastly constrains local resource options. Other complicating factors limit local strategies whether governmental fragmentation or interjurisdictional competition.

The author speculates on how local governments will respond to the forces and trends that now beset them. He concludes that such responses will go a long way in determining whether New Federalism will be seen in an evolutionary, incremental light or more revolutionary as to how the modern role of government in American society is reshaped at the local level.

Donald Haider, J.L. Kellogg Graduate School of Management, Northwestern University