Washington’s War on Local Government

Americans believe that their local governments spend money more wisely than their state and federal counterparts. But forcing localities to do more with less isn’t a recipe for government efficiency.

OPINION | March 19, 2025 •

David R. Eichenthal

Solar panels and wind turbines at the Los Angeles Department of Water and Power's Pine Tree clean energy project. — Solar panels and wind turbines at the Los Angeles Department of Water and Power's Pine Tree clean energy project in the Tehachapi Mountains. Changes to the Inflation Reduction Act’s clean energy tax credits jeopardize federal funding to local governments that want to make cost-saving investments in renewable energy. (Irfan Khan/Los Angeles Times/TNS)

One of the Department of Government Efficiency’s (DOGE) first acts was to freeze funding for grants and contracts that had already been awarded to local governments. Local government officials are lobbying Congress to head off attacks on the tax-exempt status of most municipal debt, which would lead to an upheaval in how those governments build schools, roads and other essential infrastructure. And changes to the Inflation Reduction Act’s clean energy tax credits jeopardize federal funding to cities, counties, school districts, tribal governments and other local jurisdictions that want to make cost-saving investments in renewable energy.

This war on local government is inconsistent with DOGE’s nominal focus on government efficiency.

Most Americans have a more favorable view of local government than either the federal government or state government. A December 2023 Pew Research Center survey found that 61 percent of adults had a favorable view of their local government compared to 22 percent for the federal government and 50 percent for state government.

One reason may be that Americans have historically believed local government was more efficient than the federal government. From the 1970s through 2014, respondents to Gallup surveys expressed a belief that the federal government wasted more money than states and much more than local governments. The last time Gallup asked the question, in 2014, respondents estimated that 37 cents of every local tax dollar was wasted compared to 42 cents of state spending and 51 cents of federal spending.

The Biden administration pursued a problem-solving federalism where, through the American Rescue Plan Act’s State and Local Fiscal Recovery Funds program and the Inflation Reduction Act’s “direct pay” initiatives for clean-energy projects, local governments were given extraordinary discretion over how best to spend federal resources. The result was unprecedented federal support for investments in schools, housing, crime reduction and other local government initiatives.

Now, the new leadership in Washington is turning back to a war on local government that, off and on, has dominated the federal-local relationship for nearly a half-century — from the end of bipartisan support for revenue sharing in the 1980s to Speaker Newt Gingrich’s Contract with America in the 1990s to President George W. Bush’s efforts to abolish Community Development Block Grant funding for cities in the 2000s to 100 percent congressional Republican opposition to the American Rescue Plan Act in 2021.

What is the likely result of the current version of this new war on local government? With less federal support, local governments will be forced to try to do more with less. When they exhaust opportunities to do so, they will have to cut programs and services, raise more tax dollars locally or ask their states — which are facing similar federal funding challenges — for more assistance.

What many of the voters who elected Washington’s current leadership may not understand is that these cuts and tax hikes will disproportionately affect them. If cuts in federal resources are offset by state taxpayers — who arguably might see lower federal taxes in return — the burden will be greatest for those states where federal expenditures exceed the federal revenue collected from their businesses and residents. In federal fiscal year 2022, according to the Rockefeller Institute of Government, Virginia led the 10 states with the highest balance of payments — those receiving more federal dollars than they contributed — followed by Maryland, Texas, North Carolina, Ohio, Pennsylvania, Alabama, Kentucky, Arizona and Florida. Last November, President Trump carried all but two of those states.

The impact of sweeping federal cutbacks will land most heavily on local governments that are already challenged by limited resources. Republican members of Congress disproportionately represent communities with a smaller tax base as measured by household income. U.S. Rep. Marcy Kaptur, an Ohio Democrat who represents a Toledo district, found that among members of the 118th Congress Republicans represented 55 out of the 100 districts with the lowest median household income.

The bottom line is that the war on local government will result in fewer resources going to governments that most Americans believe to be more efficient than the federal government. The burden will fall primarily on taxpayers in more Republican states and congressional districts. That hardly seems like a winning strategy politically — or a blow for greater efficiency.

David R. Eichenthal has worked in and with state and local governments for more than three decades, serving in leadership positions in New York City and Chattanooga, Tenn. Most recently, he worked with the Domestic Policy Council and the Treasury Department in the Biden administration.

Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.