What Factors Drive Municipal Fiscal Policy Adoption?: An Empirical Investigation of Major Cities in the United States

Abstract

Local policy makers operate within a confined decision-making environment and their policy-making capacities are limited by intergovernmental constraints, political culture, service demand, and economic and fiscal condition. This study investigates the effects of these factors on certain types of local fiscal policy adoption in the United States. Based on data from hundred major American cities, the result shows that a combination of state aid, state-imposed local tax and expenditure limits, fiscal decentralization, and tax authority has varied effects on the adoption of fiscal policies such as property tax increases, other tax increases, fees and user charge increases, and personnel cuts.