Local government officials have the power to allocate services, levy taxes and fees, and regulate how land and buildings are used. Municipalities make these decisions in the best interests of constituents, but they often do not result in the best outcomes. Local decision-making has led to the loss of too much open space, the building of too few homes, expensive government services, and a widening opportunity gap among residents of different income levels.
To improve outcomes for all communities, local and state policies need to move in two directions. Local governments should be given the authority and resources to make decisions that have purely local impacts, such as how to regulate their streets. They should also have more power to manage their municipal finances and diversify revenue sources.
But at the same time, states should create incentives and requirements for local governments to address issues of regional significance, including addressing the housing-affordability crisis, by reducing reliance on local property taxes, improving the planning and development approvals process, seeking cost efficiencies in the provision of local services, and creating regional school districts to promote opportunity and reduce segregation.