Local Fiscal Autonomy Under the Federal Constitution

Abstract

The exact role of local governments, including their fiscal powers, is unsettled under current federal constitutional law. The U.S. Supreme Court almost heard a case relating to such questions (Zilka) in 2025 but ultimately denied cert. That case was about whether or not the Federal Constitution requires that local taxes, such as the City of Philadelphia’s income tax, be treated as no more than state taxes. The Pennsylvania Supreme Court found that the city-level tax in question was not a state tax, a decision that the U.S. Supreme Court has let stand. This Article argues that the Pennsylvania Supreme Court was correct because long-established principles of federalism give states the power to grant substantial local autonomy. And, in fact, there are currently many areas, especially relating to fiscal affairs (such as liability under Section 1983), where local governments are treated as distinct from their states, reflecting these underlying values.