The Changing Face of Fiscal Federalism

The Changing Face of Fiscal Federalism

The Changing Face of Fiscal Federalism

The Changing Face of Fiscal Federalism

Excerpt

How we share the responsibility for basic government between the federal, state, and local levels has undergone a remarkable change during the past ten years. Over the previous twenty-year period, fiscal responsibility was gradually shifted from lower levels of government to higher levels. Then in 1978 this process was abruptly halted. Under the Carter, the Reagan, and now the Bush administrations, federal support of state and local spending programs was systematically withdrawn. As state governments felt the effects of this federal retrenchment and at the same time suffered the crippling consequences of the 1982-83 recession, they too systematically withdrew their financial support of local governments who were dependent upon them.

The impact of these changes became increasingly apparent: local governments would be expected to shoulder a greater financial burden of providing basic government services in the years ahead. No longer would our cities, towns, school districts, and counties be able to turn to state and federal officials to bail them out. In the words of John Shannon, local governments must learn to "fend for themselves."

What caused this change? How have public policies changed at the federal, state, and local levels of government? What is likely to happen in the future? Who are the winners and who are the losers in this new system of government finance? These are but some of the questions that are considered in this book. In the essays that follow, six of the nation's most highly respected scholars of government finance have placed these issues in appropriate historical context, examined the political and philosophical foundations, analyzed the adjustment process in detail, and peered into the future.

The convening of these scholars and the essays that they produced were made possible by a generous grant from the AT&T Foundation and the active support of the Institute for Scholarship in the Liberal Arts and the Department of Economics at the University of Notre Dame. But it must be noted that the real driving force behind this project was the enthusiastic support of the contributors. They were quick to endorse the concept. Those who visited the campus presented wonderfully stimulating public lectures. Each manuscript was submitted well before our deadlines. And everyone was extraordinarily generous with their time . . .

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