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Working Papers

State Constitutional Limitations on Regional Tax Sharing

Working paper #296
Carl McCarthy and Anita A. Summers

• An analysis of city-suburban regionalized activities involving America’s largest cities reveals that sharing functions and taxation occurs only with a very limited set of specified functions, and varies widely across states.
• Regional cooperation may flourish because of some states’ constitutions’ enabling characteristics. Where state constitutional limitations are very restrictive, proponents of regionalization have a particularly difficult path because constitutional change requires a massive popular movement — in contrast to changes in law that only require a legislative majority. This paper examines state constitutional provisions that enable or deter regional tax sharing in six states: California, Florida, Illinois, Minnesota, New Jersey, and Pennsylvania.
• Policy makers should not presumptively shy away from regional redistribution proposals for fear of violating state constitutional law:
1 Home rule provisions, though they give much autonomy to cities, do not leave them impervious to interference by the legislature.
2 Bans on special local laws are not absolute.
3 Uniformity of taxation provisions have widely different interpretation from state judiciaries.
• Regional redistribution is always constitutionally feasible in some form or another. Structural limitations and judicial interpretation may make it difficult–but not impossible.

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