Research Handbooks in Comparative Law series
Edited by Theodore Eisenberg and Giovanni B. Ramello
Chapter 7: A comparative view of local tax and expenditure limitations and their consequences
The size and growth of the local public sector in democratic, multi-tiered structures of government are the outcomes of the decentralized political process, subject to the fiscal rules set by upper – typically, national and state in unitary and federal countries respectively – tiers of government. Quite frequently, besides establishing local governments’ domain of competencies, own revenue sources or even the conditions for the very existence of municipal/county tiers (a manifestation of the so-called Dillon’s rule in the US local government system, and the de jure or de facto status of local governments in most European countries) those rules contain a number of limitations and obligations that considerably restrict the actual fiscal autonomy of local governments. Importantly, and partly as a result of the financial crisis of the late 2000s as discussed below, those restrictive fiscal institutions have been playing an increasing role across the developed world in the most recent years. This chapter focuses in particular on the genesis and consequences of tax and expenditure limitations (TELs) on local governments (multi-purpose authorities as municipalities, counties or provinces, as well as one-purpose districts), offering a comparison of this sort of intergovernmental fiscal arrangements in the amply studied and debated US case, and across some relevant experiences in the countries of Europe that are virtually ignored in academic research.
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