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

David E. Wildasin / dew@davidwildasin.us