David E. Wildasin Martin School of Public Policy and Department of Economics University of Kentucky Lexington, KY 40506-0027 USA
Abstract
Intergovernmental transfers are a major source
of finance to local governments. Overall, they are a surprisingly
stable and persistent component of the complex system of
intergovernmental regulatory and fiscal relations, even as the
responsibilities and powers of subnational governments evolve over
time. Transfers facilitate local fiscal adjustment to fiscal shocks
arising from natural events such as major storms and floods, from
demographic and economic shocks, from judicial decisions, or from
statutory changes by higher-level governments. They may also affect
local policy tradeoffs between more or less stable revenue sources and
expenditure obligations.
Keywords: Intergovernmental Transfers, Local Government Finance
