ABSTRACT
As the “creators” of local governments, states could have an important role in efforts to realign local services and structures. With the aftermath of the Great Recession and fiscal challenges that lie ahead there might be an opportunity for major change at the local level. Some governors have called for state leadership in restructuring their local government systems to reduce pressures on property taxes, streamline service delivery, and eliminate outmoded or non-viable local units. Despite the fiscal challenges local governments are facing, studies that have classified most local reinvention efforts as conventional or incremental. They have not produced dramatic, permanent changes in the scope, quality, and delivery of services or in governmental structures. Drawing on national surveys, news reports, case studies, and insights of municipal league and county association executive directors, two basic approaches to state–local relationships are examined: (1) the “bottom-up” or “carrot” approach, in which the state gives localities greater discretionary authority to adjust their structural, financial, and personnel systems to respond to economic pressures; and (2) the “top-down” or “stick” approach, in which governors or legislators take steps to strongly induce or compel collaboration or to realign local services or structures. Four states are showcased—Indiana, Michigan, New Jersey, and New York—that have attempted to leverage local service or structural alignments, mostly through “carrots” but also using “sticks,” as components of a broader strategy for reducing property taxes or improving local management. Recommendations for improving state-local relationships include increasing incentive funding, identifying targets of opportunity for intervention, and shifting mindsets among local officials from states as adversary to partner.
