State Policies Regarding Local Resource Acquisition

The ability of local governments to acquire financial resources is heavily influenced by state governments. States determine whether particular taxes can be used, at what levels they might be used, and the levels of state aid given to local governments. The question of concern in this analysis is the relationship among state policies in this area. There are two questions to be explored. The first is the question of whether tax limits, often established years ago, bear any systematic relationship to other state policies on local resource acquisition. The second question is what kind of relationship exists among state policies on local resource acquisition. States might pursue a pattern of compensatory policy, or "making up" for restrictions in one area by providing more aid or leniency in tax limits in another area. As an alternative, resource acquisition policies might fit into an overall pattern of supporting or limiting local resource acquisition. The analysis explores these relationships and finds support for the hypothesis that state policies in the broad area of local resource acquisition are related; and they do not fit a compensatory pattern, but a pattern of reflecting variations in support for allowing local governments to have funds.