Among the economic changes wrought by the 1980s has been a new fiscal relationship between the federal government, on one hand, and the state and local governments, on the other. Ronald Reagan heralded the “New Federalism,” which was supposed to consolidate federal grants and free the other levels of government from federal constraints. But the result has been fewer dollars without fewer mandates on cities to serve their citizens in need.
The U.S. Constitution created a federal system of government where responsibilities not expressly designated to the central government were the states’. The states devolved, through home rule arrangements, responsibilities to local governments—counties, cities, school districts, and so on. As greater flows of goods, services, people, and money have tied this national economy together, the fiscal arrangements among these levels of government have become both more complicated and less sensible....
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