Financing Governments in the 21st Century: Intergovernmental Collaboration can Promote Fiscal and Economic Goals

July 2006 - Although governments at all levels have become increasingly interdependent, limited opportunities exist for officials to meet and discuss common problems and potential solutions across the boundaries of the intergovernmental system.

The Intergovernmental Forums program, convened by the Academy in concert with a consortium of organizations representing state and local officials, seeks to fill that void. Bringing together federal, state and local leaders to discuss shared challenges, the Forums are designed to reinstitute a neutral platform for informed dialogue in a manner that disappeared with the demise of the Advisory Commission on Intergovernmental Relations (ACIR) more than a decade ago. The Intergovernmental Forum on Revenue Systems was the first in the series of Intergovernmental Forums convened by the Academy. This summary report captures the major themes, challenges and solutions shared among forum participants over a ten-month span, from May 2005 to March 2006. The Academy will issue a more extensive final report in late summer 2006.

Key Findings

The Forums program concludes that states must work more collaboratively with their local governments to achieve the goals of intergovernmental tax policy reform. As legal creatures of the state, local governments often face the brunt of state mandates on a wide range of issues. Indeed, states have more control over sub-state governments’ tax and budget policies than the federal government does over those of the states. The states’ partnership in tax administration extends to collecting taxes on behalf of local governments and returning them to the source. Accordingly, states should become better informed about unfunded mandates created by statute and policy—including restrictions on local government revenue systems—and conduct studies that consider the impact of these mandates on local governments.