A comparative view of local tax and expenditure limitations and their consequences

The size and growth of the local public sector in democratic, multi-tiered structures of government are the outcomes of the decentralized political process, subject to the fiscal rules set by upper – typically, national and state in unitary and federal countries respectively – tiers of government. Quite frequently, besides establishing local governments’ domain of competencies, own revenue sources or even the conditions for the very existence of municipal/county tiers (a manifestation of the so-called Dillon’s rule in the US local government system, and the de jure or de facto status of local governments in most European countries) those rules contain a number of limitations and obligations that considerably restrict the actual fiscal autonomy of local governments.