Working Paper #296
State Constitutional Limitations on Regional Tax Sharing
Carl McCarthy · 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:
- Home rule provisions, though they give much autonomy to cities, do not leave them impervious to interference by the legislature.
- Bans on special local laws are not absolute.
- 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.