Revenue Sharing and Governmental Reform

Even though the major purposes of the State and Local Fiscal Assistance Act of 1972 were to provide financial relief, restore intergovernmental fiscal balance, and decentralize decision making, general revenue sharing is far from neutral with respect to other fiscal, structural and functional reforms. Some elements of the program stimulate improvements at the local and regional levels, while others support the jurisdictional status quo. There have been positive effects on citizen participation in the budgetary process, the equalization of fiscal disparities, and interlocal cooperation. The program has been less successful in encouraging more vigorous state revenue-raising efforts and in targeting funds to local governments having the greatest needs. It has often worked at cross-purposes with regional planning and review processes, as well as with organizations responsible for their conduct. The pending renewal of general revenue sharing will open a new chapter in the debate over governmental reform. Exclusion of limited purpose jurisdictions and removal of the 20 percent floor and 145 percent ceiling on local entitlements will likely receive particular attention as ways of providing more assistance to larger counties and municipalities. Yet, differences among the reformers themselves, probable political support for continuation of the program without basic changes, and philosophical resistance to attaching strings suggest that closer ties between general revenue sharing and government reform will be difficult to develop.