The State-Local Fiscal Relationship in California: A Changing Balance of Power Book

The passage of Proposition 13 in 1978, which shifted fiscal power from general-purpose local governments to the state, has created considerable tension in state-local relationships. However, tension between local governments and the state is nothing new. To place the current debate in its historical context, the authors use revenue and expenditure data from 1916 to 1995 to examine the degree to which the state and federal governments have controlled the ability of cities and counties to raise and spend local revenues. The authors also test the vulnerability of different local government revenue streams over time to economic and political shocks at the state and national level, thereby providing a third measure of local control in the form of predictability of revenue. Finally, they explore the ways that recent shifts in the local finance structure have challenged historical expectations and standards for the state-local relationship and discuss current reform proposals in that context.