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Edited by Henrik Enderlein, Sonja Wälti and Michael Zürn
Chapter 7: Multi-level Governance, Decentralization and Fiscal Federalism
Mark Hallerberg An important part of any discussion of multi-level governance is the fiscal relationship among the different governmental actors. To explain a given policy even if it is not strictly ‘fiscal’ in nature, one wants to know who receives money and who pays for any particular policy as well as the level of government that makes the decision and administers it. The main literature that considers these relationships focuses on ‘fiscal federalism.’ As I will explain in more detail below, one element of this literature is simply a description of the division of fiscal responsibilities. Education spending may be primarily the domain of the states, as is the case in Spain since 2002, while water provision may be the domain of localities. Still other goods that governments provide may come from several levels of government; one only has to think of federal, state and local police and the many American movies that have been produced that highlight the tension between (and among) law enforcement agencies. Similarly, on the revenue side, certain taxes may be restricted to one level of government or another, or there may be arrangements where specific taxes are shared. This exercise fits directly into discussions about the power different levels of government have over each other as well as the interconnectedness of the different levels when it comes to fiscal matters. Fiscal federalism more generally is mostly relevant for Type I multi-level governance, that is, for governance that extends across policy areas, that is relatively stable...
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