The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.
State laws shape the extent to which municipalities can raise and manage revenue. These laws define what types of taxes cities can levy, how those taxes are collected, and the degree of flexibility local governments have to respond to changing fiscal conditions.
In addition to defining tax authority, many states impose tax and expenditure limits (TELs). TELs are legal constraints that restrict how much revenue a local government can raise or how much it can spend. These limits can take several forms, including caps on property tax rates or levies, restrictions on revenue growth, or requirements for voter approval before increasing taxes.
Together, tax authority and TELs shape how municipalities fund services, plan budgets, and respond to economic changes. While TELs are often designed to promote fiscal discipline or limit tax burdens, they can also influence the composition of local revenues and the tools cities use to maintain financial stability.
About This Work
Since 2019, the National League of Cities (NLC) has partnered with the Center for Public Health Law Research at Temple University Beasley School of Law to track and understand state-level preemptions of local authority. This brief provides an overview of trends in tax and expenditure limits tracked in the CPHLR database from 2019 to 2022. The analysis highlights types of tax expenditure limits that states impose on local governments. Additionally, this analysis also looks at different general fund tax collection authorities of municipalities across the country.
The brief is available for download: Tax Authority & Tax and Expenditure Limits - National League of Cities