ABSTRACT
Several years ago, the mayor of a medium-sized American city identified his three major problems as "money, finances, and revenues."l He, like other local officials in the United States, however, has had only limited control over his city's financial problems. Local officials rely on whatever sources of income the states are willing to let them tap into and on whatever financial assistance the states or the federal government are willing to give them. They also face the constant prospect that other governments, especially when confronted with revenue difficulties of their own, will both cut local aid and shift as many of their costs as possible to local governments. In a broad sense, state and local governments are in the same boat when it comes to gathering revenues: both are subject to the ups and downs in the general economy and to shifting public attitudes regarding taxing and spending. Still, there is much the states could do to give localities greater revenue stability.
