Does Local Government Autonomy Promote Fiscal Sustainability? Lessons from Illinois

Matthew Walshe
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Matthew Walshe: University of Toronto

No 42, IMFG Papers from University of Toronto, Institute on Municipal Finance and Governance

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.

Keywords: Local government autonomy; fiscal sustainability; home rule; fiscal institutions; tax and expenditure limits; debt limits; municipal finance (search for similar items in EconPapers)
JEL-codes: H11 H70 H71 H72 H73 H74 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2019-01
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:mfg:wpaper:42

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