State governments impose fiscal rules on their local governments to control the growth and size of spending, revenues, and debt, and to ensure that local budgets are balanced. Because these rules often apply to different types of local governments, they are called state-imposed local fiscal rules. They include tax and expenditure limits, debt limits, and balanced budget requirements.

Theories from public finance and economics suggest that fiscal rules improve fiscal discipline in local governments. But evidence on the outcomes of local fiscal rules is limited because of the absence of up-to-date information on local fiscal rules. The federal agency tasked with documenting local fiscal rules – the U.S. Advisory Commission on Intergovernmental Relations – was abolished 25 years ago. This project involves legal research to identify and catalog local fiscal rules and a national survey of state and local governments to gather information on how governments implement these rules in practice. In the absence of a national database on local-level fiscal institutions, this research will be one of the first studies to assess how local fiscal institutional design choices affect the ability of a national sample of local governments to fund and provide different public services sustainably.