State Control of Local Government

October 29, 1937

Report Outline
Trend Toward State Centralization
Growth of State Control Over Schools
Centralization of Highway Operations
State Control of Welfare Services
Centralization of Law Enforcement
State Control of Local Civil Service

Trend Toward State Centralization

Rapid acceleration of the trend toward state control of local government was one of the most significant effects of the depression. State governments had begun many years earlier to impose central supervision over local finance, and they had likewise imposed a measure of control over the administration of school and highway services in extending subsidies to cities, counties, and other local units for the support of these services. Following the collapse of their financial structures early in the depression, however, local governments turned to the states for additional funds. State governments were called upon not only to increase their customary contributions for the support of schools and highways but also to take a hand in financing other services, such as unemployment relief and old-age assistance, which had previously been supported entirely from local sources. In assuming increased responsibilities for the support of local services, the states insisted on imposing new and stronger safeguards against uneconomical use of funds. The result was a vast increase in state control over local administration.

In some instances, state governments assumed direct responsibility for both the support and the administration of such services as education, highway construction and maintenance, unemployment relief, or old-age assistance. Usually, however, state control was indirect. Funds were supplied to local units in the form of subsidies or as local shares in the proceeds of state-administered taxes. Local administration was retained but was placed under state supervision.

Basic Causes of Trend Toward State Centralization

The present trend toward state centralization is due in large part to the fact that there is no correlation between the tax-raising capacity of local governments and the cost of the services they are called upon to perform. Although they have been constantly assuming new functions and improving existing services, local governments have been compelled to rely principally on one source of revenue—property taxes—to meet mounting expenses. Diversification of local tax sources has been impeded both by legal restrictions and by a potent economic obstacle—the impracticability of taxing mobile subjects over small areas State centralization thus represents an effort to shift the costs of local government from local property taxes to state levies on many other types of wealth.

ISSUE TRACKER for Related Reports
State and Local Governments
Feb. 26, 2021  State Finances
Sep. 11, 2009  State Budget Crisis
Oct. 03, 2003  State Budget Crises
Dec. 24, 1971  State Legislatures in Transition
Sep. 25, 1968  State Constitutional Reform
Oct. 11, 1967  Local Government Modernization
Aug. 15, 1956  Metropolitan Government
May 25, 1939  Reorganization of City Government
Feb. 24, 1939  Reorganization of County Government
May 23, 1938  Reorganization of State Governments
Oct. 29, 1937  State Control of Local Government
Sep. 01, 1936  Consolidation of Local Governments
Jan. 03, 1933  Reorganization of Local Government
Jun. 02, 1930  Changes in American City Government
Oct. 30, 1924  Political Statistics of the States
State, Local, and Intergovernmental Relations