State policy under devolution: Redistribution and centralization

Political theory argues redistributive spending is best made at higher leve ls of government, but under devolution, state policy becomes the most signi ficant arena for redistributive activity, Using Census of Government data f or 1992, this paper compares Federal and State aid to county areas and cons iders the role of state centralization of fiscal responsibility on local re venue raising efforts, Both the magnitude and redistributive nature of stat e aid are greater than federal aid. However, because state centralization h as a large impact on reducing local fiscal stress, differences in state pol icy choices create a very uneven landscape of local tax effort.