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Does Local Government Autonomy Promote Fiscal Sustainability? Lessons from Illinois

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  • Matthew Walshe

    (University of Toronto)

Abstract

Since the implementation of its 1970 Constitution, Illinois has granted home rule to any municipality with a population exceeding 25,000 and allowed municipalities below that population threshold to adopt home rule by referendum. In Does Local Government Autonomy Promote Fiscal Sustainability? Lessons from Illinois's Home-Rule Municipalities, Matthew Walshe studies the question of whether the local government autonomy conferred through home rule promotes fiscally sustainable policies. A difference-in-differences estimation shows that home rule enlarges the public sector but improves operating surpluses. There is no evidence that home rule causes an increase in the debt burden, although it does cause a marked substitution of general obligation bonds for other forms of debt instruments.

Suggested Citation

  • Matthew Walshe, 2019. "Does Local Government Autonomy Promote Fiscal Sustainability? Lessons from Illinois," IMFG Papers 42, University of Toronto, Institute on Municipal Finance and Governance.
    • Handle: RePEc:mfg:wpaper:42
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    References listed on IDEAS

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    Cited by:

    1. Koomin Kim, 2023. "How gubernatorial budgetary power and interest groups affect vertical fiscal imbalances in the US states: Focusing on fiscal centralization and decentralization," Public Budgeting & Finance, Wiley Blackwell, vol. 43(2), pages 53-81, July.
    2. Pengju Zhang & Phuong Nguyen‐Hoang & Na Chen, 2022. "The impact of home rule on municipal boundary and fiscal expansion: Evidence from Texas," Journal of Regional Science, Wiley Blackwell, vol. 62(5), pages 1442-1466, November.
    3. Pengju Zhang & Phuong Nguyen‐Hoang, 2023. "Home rule and municipal revenue stability: New evidence from Texas," Public Budgeting & Finance, Wiley Blackwell, vol. 43(1), pages 38-60, March.

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    More about this item

    Keywords

    Local government autonomy; fiscal sustainability; home rule; fiscal institutions; tax and expenditure limits; debt limits; municipal finance;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing

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