In the study of state-local relations, interactions between the two layers in fiscal policy are an important area. States direct and exercise oversight over local governments, also provide substantial financial assistance. These have played into the state-local interactions in their fiscal...

This paper explores the fungibility between earmarked local option sales taxes and general revenue. We predict that as the adjustment costs to the budget grow, there will be less compensation from general revenue. We use national county level data from 1983 to 2004 to examine the effects of...