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Abstract

This essay argues that under the current system of American state and local government funding schemes, there is a permanent imbalance between revenues and expenditures as a result of strain placed on local governments by other levels of government which can only be fixed with actions take by these other levels of government. This essay examines the current structure of American "Fiscal Federalism", the recent experience of America's cities with Fiscal Federalism (particularly New York), changing relationship between city and state government, and Governor Mario Cuomo's proposal for a phased-in takeover of Medicaid spending. The author concludes that the Governor's proposal is a step in the right direction, but insufficient to overcome the permanent imbalances in local government funding.

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