The fiscal federation
The fiscal federation refers to how expenditure side and revenue side are allocated across different sectors of the administration; on the other hand local government refers to lowest form of public administration. The following is contrast between the roles of local government in context of American fiscal federalism to role played local government in other countries. In revenue sharing the federal government give money to the states with no restrictions attached whatsoever. The federal government allocates money to the local governments .It sets the national budget that determines how funds are allocated .A specific amount of fund is set aside for the purpose specifically set by the government .This results in direct economic impact on the country. The local government is favored in all revenue allocation systems while the fiscal federalism is tilted more in favor the federal government (Xu &Warmer, 2015).
The federal government uses a number of tactics to compel states to follow its policies and guidelines. The state is ordered to comply but usually applies pressure more subtly by threatening to withhold funds from disobedient states. Mandates sometimes the federal government orders states to do certain things, such as obeying housing laws or environmental regulations(X u&Warmer, 2015).During distribution of funds the function of federal government is to determine more specifically how those funds will be distributed to each local state. Eventually the local government roles involve distributing their funds allocated by the federal government to the ministries such as social welfare and mineral sector.
According supremacy clause all laws passed by the federal government take priority over state and local laws. The federal government, override state laws if it demonstrates a compelling national interest this is preemption. This ensures there is stabilization in the federal government in the other hand the local government doing its budget to provide economic growth(X u &Warmer, 2015). Federal governments is relating to one another. States do compete or cooperate on many issues, for instance from environmental policy to economic development. One local government may reduce its tax rate so as to attract businesses away from other local governments. States have a great deal of leeway in how they behave toward one another.