This paper will examine revenue policy and its relationship to local governments. It will outline the various revenue sources available to local governments and in turn, the unique role these revenue sources play in building relationships between federal, state and local governments. This research will show that as demographics and the economy itself change, so must the revenue sources themselves change. As all levels of government face mounting fiscal and budgetary pressure, local governments especially, must be prepared to respond. With limited options in regards to revenue collection, local policymakers and administrators must consider alternative revenue sources in an effort to continue providing essential public services.
A review of literature in researching municipal revenue sources finds various local revenue handbooks, working papers, nonprofit research studies and scholarly articles. Also of much help are U.S. Census numbers that assist in reviewing and analyzing intergovernmental transfers. Richard Dye’s working paper outlines the state-local relationship that is built in terms of municipal revenue sources. U.S. Census numbers help to support Dye’s assertion by detailing the importance of intergovernmental transfers to local governments over the years. Local revenue handbooks provided by numerous states also provides a unique look into the often-complicated tax structures and limited ability of local governments to raise revenue. Research studies conducted by the National League of Cities (NLC) and various municipal leagues provided important analysis on local government revenue and the importance of local policymakers needing to stay current and forward-thinking in regards to local revenue generation. Donald Shoup, professor of Urban Planning at the University of California-Los Angeles (UCLA), provides unique insight into the link between transportation and land usage and its effects on local economies....