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The sales tax revenue implications and administrative efficacy of Colorado municipal home rule

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The sales tax revenue implications and administrative efficacy of Colorado municipal home rule
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Stilwell, Jason John
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English
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287 leaves : ; 28 cm

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Use tax -- Colorado ( lcsh )
Home rule -- Colorado ( lcsh )
Municipal government -- Colorado ( lcsh )
Revenue -- Colorado ( lcsh )
Home rule ( fast )
Municipal government ( fast )
Revenue ( fast )
Use tax ( fast )
Colorado ( fast )
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bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

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Includes bibliographical references (leaves 241-287).
General Note:
School of Public Affairs
Statement of Responsibility:
by Jason John Stilwell.

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University of Colorado Denver
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Full Text
THE SALES TAX REVENUE IMPLICATIONS AND ADMINISTRATIVE EFFICACY OF
COLORADO MUNICIPAL HOME RULE
by
Jason John Stilwell
A.A., Cuesta College, 1989
B.A., California Polytechnic State University, San Luis Obispo, 1991
M.P.A., San Jose State University, 1993
A thesis submitted to the
University of Colorado at Denver
in partial fulfillment
of the requirements for the degree of
Doctor of Philosophy
Public Administration
2000


2000 by Jason John Stilwell
All rights reserved.


This thesis for the Doctor of Philosophy
degree by
Jason John Stilwell
has been approved
by
(J John Buechner
ichard Stillman
'Q-t
Date


Stilwell, Jason John (Ph.D., Public Administration)
The Sales Tax Revenue Implications and Administrative Efficacy of Colorado
Municipal Home Rule
Thesis directed by Professor Robert W. Gage
ABSTRACT
This dissertation examines the contemporary impact of municipal home rule on
municipal sales tax revenue and on municipal policy as viewed by administrators. It tests
whether municipal home rule authorities in Colorado augment sales tax revenues and if
municipal administrators believe those authorities enable a municipality to operate more
effectively, efficiently and with more citizen involvement.
There are two research questions in this study. The first is: Do Colorado's home rule
municipalities generate more sales tax revenue than their statutory counterparts? The second
is: Is there a relationship between home rule and municipal efficiency, effectiveness, and
democratic values as viewed by municipal administrators? The research questions lead to a
two-part research design. This study first uses multiple regression to analyze the relationship
between sales tax revenue and home rule. This study then uses a multiple case study design
to broaden the financial research and further demonstrate the relationship between home rule
and municipal efficiency, effectiveness, and democratic values.
This study finds Colorado home rule municipalities do not generate more revenue
than their non-home rule counterparts and demonstrates Colorado home rule municipalities
are able to ameliorate service to their residents as perceived by municipal administrators.
This finding was unanticipated as home rule municipalities have broader financial authority
and municipal officials believe home rule augments their revenue; three reasons for this
IV


finding are the impact of state mandates on home rule municipalities, the mollification of
additional home rule revenue by municipal policy decisions to reduce non-home rule
revenues, and the insignificant level of home rule based policy revenue relative to total
municipal revenue. The study concludes Colorado's home rule municipalities remain
dependent on the state.
This abstract accurately represents the content of the candidate's thesis. I recommend its
publication.
Signed
Robert W. Gage
v


DEDICATION
I dedicate this thesis to Vernon Stilwell who showed great support for this work and waited
as long as he could.


ACKNOWLEDGMENTS
Many people have contributed directly or indirectly to the development of this thesis.
Foremost I would like to thank Bob Gage for serving as the committee's chair and for his
insight into the subject and commitment, the members of the committee, Richard Box, John
Buechner, Richard Stillman, and Sam Mamet for their support and direction, and the faculty
and staff at the Graduate School of Public Affairs. I would also like to thank those who
began my instruction in public administration: Allen Settle at California State Polytechnic
University San Luis Obispo and Donsung Kong at San Jose State University. Next I wish
to express my gratitude to those authors whose works have especially aided me: Luther
Gulick, Anwar Hussain Syed, and Joseph Zimmerman. While the guidance, support, and
instruction is theirs the mistakes and oversights are solely mine; of course, these fine
teachers are in no way responsible for any errors this thesis may contain.
Last I am grateful to Amanda Hendrix and my parents for their personal support and Bruce
Williams and the Town of Superior for their professional support.


CONTENTS
Figures ......................................................... xi
Tables ......................................................... xii
CHAPTER
1. INTRODUCTION .................................................. 1
2. THE LITERATURE ................................................ 5
Definitions And Descriptions .................................. 5
Advantages And Disadvantages ............................... 8
Origins Of Municipal Home Rule ............................... 10
The Early American Years .................................. 10
The Rise Of The States .................................... 11
Municipalities Swing The Pendulum ......................... 16
The Line Between Municipal And Statewide Concerns ..........21
Two Paths For Municipal Home Rule ..........................29
Home Rule And Metropolitanization ..........................30
Contemporary Home Rule ........................................36
Financing Home Rule Authority...............................37
Inter-Local Relations In The Urban Environment .............41
Home Rule's Theoretical Bases .................................43
Democratic Theory ..........................................45
Competency Theory...........................................48
Home Rule As The Compliment Of These Two Theories .........53
Home Rule Across The United States ............................56
Home Rule By Region.........................................57
Municipal Home Rule In Colorado ...............................58
viii


The Evolution Of The Legal Structure ........................58
Colorado Home Rule In Context ...............................62
Statewide Versus Municipal Concerns In Colorado .............64
Colorado Home Rule Authority ................................66
Financial Authority .........................................69
Revenue Limitation Provisions In Colorado ...................72
3. METHODS AND PROCEDURES .........................................77
Research Design ................................................77
Multiple Regression .........................................77
Case Study...................................................80
4. QUANTITATIVE ANALYSIS ..........................................84
Research Question ..............................................84
Home Rule And Population ....................................85
Results ........................................................88
Implications ...................................................91
Follow-Up ......................................................92
Analysis Of Colorado Cities With Specific Populations .......92
Analysis Of Colorado Cities With Specific Sales And Use
Tax Revenue .................................................95
Summary And Conclusions ........................................99
5. MULTIPLE CASE STUDY ANALYSIS ................................. 101
Research Question ............................................ 103
Case Study Selection Table ................................... 104
Findings ..................................................... 108
Interpretation Categories ................................. 108
Description Of Case Study Municipalities .................. 110
General Implications Of Home Rule ......................... 112
Fiscal Implications Of Home Rule........................... 125
IX


Home Rule And Democratic Theory And Competency
Theory................................................. 135
Implications ................................................ 145
Summary And Conclusions ..................................... 146
6. COMBINED FINDINGS AND CONCLUSIONS ........................... 149
Benefits Of Home Rule In Colorado ........................... 150
Home Rule Financial Authorities Do Not Lead To Increased
Sales Tax Revenue ........................................ 153
Conclusions ................................................. 156
CODICILS ....................................................... 159
Survey Of Home Rule Across The United States ................ 159
Multiple Regression Data Table .............................. 188
Multiple Regression Result Tables ........................... 190
Code Descriptions ........................................... 198
Interview Questionnaire ..................................... 200
Letter Of Interview Request .............................. 201
Interview Transcripts ....................................... 202
Pre-Test--Town Of Superior ............................... 202
City Of Brighton ......................................... 207
City Of Lafayette ........................................ 211
City Of Louisville ....................................... 218
City Of Loveland ......................................... 226
City Of Northglenn ....................................... 231
Case Study Matrix Categories ................................ 240
BIBLIOGRAPHY ................................................... 241
Cases Cited ................................................. 284
x


FIGURES
Figure
4.1 Number of Municipalities by Population Group..................86
4.2 Periods in which Municipalities Adopted Home Rule Charters.. 87
xi


TABLES
Table
3.1 Descriptive Statistics for Colorado's 1996 Sales Tax
Revenue.................................................. 80
4.1 Regression Analysis of Adjusted Sales and Use Tax to
Municipal Population, Home Rule Status and Median
Home Value............................................... 90
4.2 Multicollinearity Test.................................. 92
4.3 Regression Analysis of Adjusted Sales and Use Tax to
Municipal Population, Home Rule Status and Median
Home Value for All Colorado Municipalities Exceeding
Ten-Thousand Population.................................. 94
4.4 Regression Analysis of Adjusted Sales and Use Tax to
Municipal Population, Home Rule Status and Median
Home Value for All Colorado Municipalities with
Population greater than 5,000 and less than 20,000....... 96
4.5 Regression Analysis of Adjusted Sales and Use Tax to
Municipal Population, Home Rule Status and Median
Home Value for All Colorado Municipalities with 1995
Actual Sales and Use Tax Revenue Exceeding $1 million...98
4.6 Regression Analysis of Adjusted Sales and Use Tax to
Municipal Population, Home Rule Status and Median
Home Value for All Municipalities with 1996 Actual Sales
and Use Tax Revenue Exceeding $1 million.................100
5.1 Level of Interviewee Understanding......................114
xii


CHAPTER 1
INTRODUCTION
A fundamental right in American law and culture is self-determination. The United
States Constitution embodies this principle as a legal basis and many religions, philosophies,
cultural norms, and mores hold free will as a basic value. Self-determination is tightly
stitched into the American fabric.
American history is marked by attempts to preserve self-determination and expand
opportunities for citizen involvement in their government. The Progressive Era, from 1900
through either 1917 (Chambers 1980) or 1920 (Cooper 1990), is a key point in this history
which marked an effort to eliminate the spoils system, improve governance and grant people
more access to their governments. Home rule is one solution advocated by the Progressives
to help municipalities accomplish these goals. Home rule was envisioned by its Progressive
creators as a way to provide municipal residents with both enhanced self-determination and
improved local government.
Colorado municipal home rule is the right of voters in a municipality to adopt a
charter granting the municipality authority over issues of local concern. Municipal home
rule enables municipal voters to adopt and amend a home rule charter that acts as the city's
basic governing document. The charter clarifies missions, policies, and desires of the
residents to give the city officials a firmer framework within which to work. Elected and
appointed officials are subordinate to the charter and are required to follow its provisions.
Home rule shifts authority from elected and appointed officials to the voters enhancing
self-determination.
Home rule also derived from a desire by the Progressives to make government better
at serving its constituency. Home rule enables a community to establish laws, policies, and
practices that are specific to the community and designed to best meet the municipality's
unique challenges. Voters can grant their municipal officials greater authority to meet
1


certain goals of the community and can approve home rule charter language that constrains
the municipality in other areas.
Municipalities pushed for home rule in the late nineteenth century as a way to
ameliorate functionability by reducing state influence over municipal operations and policy.
Home rule grants greater authority to municipalities. Most states grant certain power and
authority to municipalities whereas home rule allows the municipal voters to adopt power
and authority that can exceed that granted to municipalities by the state.
Voters can only become more involved and grant greater authority to their municipal
government if allowed by the state. Home rule laws vary greatly across the United States.
Some states give great freedom to their municipalities while others strictly control them.1
The level of state control and basis of home rule authority impacts a home rule municipality's
ability to meet the needs and demands of its constituency.
Voter demands on their municipalities have changed much since home rule's
inception. The evolution from an agrarian to an urbanized population in the United States
has increased the onus on municipalities to remain open and effective governments.
Contemporarily the majority of America's citizens reside in municipalities. The urban
migration has brought new challenges and service demands to the Nation's municipalities.
Municipalities must coordinate regional transportation, utility, and social services and must
meet new challenges in land use, resource management, and administration.
Evolving population trends increase the importance of examining if the original
benefits of home rule persist in the urbanized setting. Do the benefits of home rule transfer
to the urbanized municipality with its new set of challenges? Many of the underlying
theories of home rule derived from nineteenth century concerns such as the patronage
system, party politics, and increased state intervention into local issues.
Much of the home rule research and examination of its effectiveness occurred in the
early to mid-twentieth century as a reassessment of original goals and through analysis in the
urbanizing post-war years. The municipalities have continued to grow at remarkable rates
and administrative technological advances have been increasingly utilized by municipal
See Bromage (1957, 117-121) for a discussion of the types of municipal home rule in the
United States including: self-executing, non-self-executing, and legislative.
2


officials to meet the increasing demands of their citizenry. There is less research analyzing
the contemporary impact, effectiveness, and advantages of home rule. This study will
reexamine the concept of home rule in today's municipal environment.
The purpose of this study is to examine contemporary municipal home rule and its
impacts on sales tax revenue and administration. Municipal science is an incubating field
with municipalities searching for more efficient and effective service delivery methods and
procedures. Efficient and effective government is important in this era of urbanization as
greater numbers of people live in cities and rely on municipal services. This study focuses
on home rule as a tool for municipal administration, operation, and governance.
The enhanced authority granted by voters to a municipality through a home rule
charter enables home rule municipalities to be more competent governments; competency
theorists suggest a competent government is one that is able to carry out its functions and
duties efficiently and effectively. Democratic theorists, rooted in the Jeffersonian ideal,
argue that local government, being closest and most accountable to the people, is the level of
government in the American federal system most accessible to citizen self-governance. This
study quantifies and qualifies these assertions. Home rule authorities vary greatly among the
states. Because of the varietal nature of home rule this study focuses on Colorado.
A multiple regression analysis quantifies the impact of home rule by examining if
home rule municipalities, through their expanded powers, generate more sales tax revenue
than their non-home rule counterparts. The quantitative study research question is: does
home rule benefit a municipality's sales tax collections? The research will determine if
municipal home rule is a statistically significant predictor of a municipality's primary
revenue base. This research also explores the factors of the size of the municipality and
median home value to examine the relationship with municipal revenues.
This study probes the impact of home rule in greater depth by means of a multiple
case study of municipal officials to determine the primary benefits of home rule in Colorado.
The research question of the case studies is: municipal administrators believe home rule
municipalities provide more efficient, effective, and democratic services than comparable
statutory municipalities. The case study analysis focuses on a select pairing of Colorado
3


municipalities to determine their experience with home rule. The case studies focus on
interviews with key officials in those municipalities to ascertain home rule's impact or
potential effect on their policies, administration, effectiveness, and self-determination.
The results of this study will update earlier research on home rule. This research will
determine if home rule continues to offer the advantages to municipal administrators,
officials, and constituents intended by the Progressives. This study will answer the
questions: Does home rule continue to grant voters greater influence in their municipal
government's operations? Do home rule authorities enable municipal officials to be more
effective and efficient in operating the municipality?
Municipal operations are becoming more professional. In an age of reinventing,
measuring the performance of, and streamlining government this study will assist
administrators to determine if home rule is a method by which municipalities can improve
their operations.
A meter of home rule's impact on authority is municipal revenue. This study will
examine municipal revenues to determine if home rule augments them. The research will
examine if such augmentation denotes greater authority for home rule municipalities than for
non-home rule municipalities and if such authority allows the home rule municipality more
policy flexibility, improved service, or greater access by its constituency.
The findings of this study are significant to those arguing for more open access to
government. Home rule could allow voters more influence in their municipal government.
Municipal governments, being the government closest to its constituency, can use its home
rule authority to expand direct democracy opportunities and voter involvement.
A survey of the literature follows in which there is a review of the definitions and
descriptions of home rule, the origins of home rule, and the distinction between municipal
and statewide concerns. The two theories, competency theory and democratic theory, are
explained in the literature review which concludes with a detailed examination of home rule
in Colorado.
4


CHAPTER 2
THE LITERATURE
This literature review will establish the basis for the research. It begins by defining
and describing the meanings and concepts of home rule and then examines the origins of
home rule to create an evolutionary context. It reveals that home rule was a reaction to state
dominance of municipalities and their local issues, the courts have been deeply officious in
defining the separation of state and local realms of government, home rule did not evolve
uniformly, and metropolitanization raised great new concerns and challenges for local
governance. Two of the contemporary challenges are finance and inter-local cooperation.
Metropolitanization, and the challenges of adequate pecuniary authority and inter-local
cooperation, can be understood in terms of the theoretical debates distinguished as
democratic theory and competency theory.
Contemporary literature makes the case of home rule being the compliment of these
two theories home rule facilitates local policymaking on local issues while giving the
municipality more authority, and increasing its competence, to meet municipal challenges.
The literature review then proceeds to examine the highlights of home rule in each of the
states. Finally the chapter focuses specifically on the nuances of home rule in Colorado, as it
will be the setting for this study. The subsequent research will quantify the financial
strength of home rule municipalities and qualify their ability to more competently and
democratically meet their challenges.
Definitions and Descriptions
Home rule is an authority municipalities may adopt in most states (Banovetz et. al.
1994, 30; ACIR 1993, iii; Coates). Farrar traces the concept of home rule deriving ultimately
"from the Tenth Amendment of the U.S. Constitution, providing that states and the American
5


people themselves retain all powers not granted to the federal government" (Farrar 1996, 54).
Each state "is a separate political and legal system, operating very different administrative
systems that include local governments of enormous variety" (Anton 1989, 45). Home rule
exists in most states although the authority it confers varies greatly. The following sample of
definitions demonstrate this great variety.
Municipal home rule may be defined as a relationship between the cities and the state
in which the cities enjoy the fullest authority to determine the organization, procedures, and
powers of their own governments, and a maximum of freedom from control by either the
legislature or state administrative officers (Mott 1949, 49) or as the authority of a local
government to draft, adopt, amend, repeal, or alter a charter for its own government
(Buechner 1967, 138). It is the "right of a municipality to govern itself in local and
municipal matters, with a charter approved by the voters" (Catherwood 1997, 19). Black's
Law Dictionary defines home rule as a "state or constitutional provision or type of legislative
action which results in apportioning power between state and local governments by
providing local cities and towns with a measure of self government if such local government
accepts terms of the state legislation" (Black's 1990, 733). Elliot and Ali's State and
Local Government Political Dictionary {1988) defines home rule as:
Power granted to local governments to draft charters and to manage their own affairs.
Home rule limits state intervention in local matters by permitting local governments
to determine their own governmental structures, raise revenues, promote the general
welfare, and regulate local activities. Home rule may be mandated or permitted by
state constitution or be approved by legislative enactment without specific
constitutional authorization. In addition, state legislatures may grant home rule
charters under special acts, general laws, or optional plans. Home rule, observes
political scientist Rodney L. Mott, serves three objectives: (1) it grants local
governments the power and flexibility to satisfy increasing demands for local
services; (2) it permits local governments to determine the kind of government best
suited to their needs; and (3) it usually protects local governments from state
intervention, while protecting the state from the constant pressures of local
governments for additional power to respond to new challenges (Mott 1949, 11-12).
In recent years, government reformers have championed the cause of home rule (48).
As these various definitions demonstrate home rule is defined differently in particular
contexts. Nearly every state has a distinct definition of home rule. The operational
6


definition of home rule used in this study is tailored to Colorado. Colorado municipal home
rule is the right of voters in a municipality to adopt a charter granting the municipality
authority over issues of local concern.
(
Colorado Municipal Home Rule:
The right of voters in a municipality to
adopt a charter granting the municipality
authority over issues of local concern.
*
The term "home rule" apparently developed in connection with Ireland's movement to
obtain local autonomy (ACIR 1993, 41) and later became a general phrase applying to all
forms of local or regional self-determination (Munro 1930, 434). Although myriad
definitions of the term exist it is very difficult to formulate a precise definition of home rule
inasmuch as there exists no unanimity of agreement among authorities concerning its
meaning (VanLandingham 1968, 279). Indeed, Zimmerman notes a major problem with the
home rule literature "involves the loose definition of the term 'home rule'" (Zimmerman
1978, 2) and the difficulty in measuring such powers (ACIR 1981, 1). Zimmerman proceeds
to clarify the definition by defining home rule as the "constitutional prohibition of the
passage of special legislation affecting a single local government by the State Legislature
without a request from the affected local government or an emergency message from the
Governor, and the legal right of voters of a political subdivision to draft, adopt, and amend a
charter, and supersede special laws enacted prior to the grant of 'home rule' powers and
certain general laws of the State" (Zimmerman 1978, 2-3).
Littlefield explains "there are two basic characteristics of municipal home rule
political theory which are essentially complementary. First, the state legislature is directed
to cease its participation and interference in the local affairs of cities. (Second), and
necessarily, the people of a city and their locally elected representatives must be empowered
to govern themselves in the local matters which concern the day to day needs of a city and its
people" (Littlefield 1962, 3).
7


Advantages And Disadvantage
Along these theoretical lines, Zimmerman outlined the advantages and disadvantages
of home rule (Zimmerman 1992, 172). The four main advantages he lists are: (1) home rule
eliminates or greatly reduces legislative interference in city affairs; (2) it permits citizens to
determine the form and administrative organization of their local government; (3) the state
legislature is relieved of the time-consuming burden of special legislation and can devote its
exclusive attention to state problems, and; (4) home rule permits citizens to have a greater
voice in the determination of local government policies and thus encourages many more
citizens to become interested in and participate in local affairs.
Zimmerman similarly cites four major disadvantages of home rule (Zimmerman 1992,
173). The disadvantages are: (1) frequent changes in the charter may cause instability in a
local government; (2) owing to proposals to amend the charter, the ballot may become
excessive in length at each election and discourage citizens from casting a vote on each
referred issue; (3) home rule allows local political machines increased freedom from state
supervision and interference, and; (4) the system makes more difficult the solution of
areawide problems since a strategically located municipality could refuse to cooperate with
its neighbors and block potential solutions to these problems. Zimmerman further asserts
"(i)n practice these concerns have proven to be minor because charters are not amended
often, local political machines have become extinct or weak, and the state legislature possess
plenary authority to solve areawide problems" (Zimmerman 1992, 173). However, home
rule elections are low stimulus elections according to Agranoff (Agranoff 1977) which may
be a further disadvantage.
Municipal "home rule promotes, according to its proponents, democracy,
self-government, and citizen interest. Although home rule has served to strengthen local
government and to increase local control, it has several important limitations" (Elliot and Ali
1988, 48). The limitation on the legislature is one advantage to home rule governments
(Siffen 1948) but "in many cases, local officials must still secure legislative approval of
governmental initiatives. Furthermore, home rule cities may not approbate ordinances that
8


conflict with either the state constitution or relevant state laws. They also may not pass
ordinances that affect a 'state interest' (one that transcends local matters, e.g., consumer
protection, traffic regulations, waste disposal)....While home rule does not supplant state
supremacy, it does encourage increased discretion and flexibility at the local level. Still, as
its critics argue, home rule is not without its drawbacks. For example, it may produce a lack
of coordination, political infighting, parochialism, capriciousness, and unpredictability.
Whatever its theoretical benefits, home rule must be evaluated in terms of the basic goals
and objectives of government: efficiency, effectiveness, innovativenness, and equity" (Elliot
and Ali 1988, 48-49).
Zimmerman, Elliot, Ali, and others elucidate and debate the definitions, descriptions,
and advantages and disadvantages of home rule. What I intend to do herein is focus on the
intergovernmental relations between the state and municipal governments to explain further
the powers and authorities each level possesses. Intergovernmental relations are the
"interactive activities between governments" (Christensen 1999, 13); W. Brooke Graves
claims to have been the aboriginal user of the term (Graves 1960, 231). This will follow a
brief review of the origins of municipal home rule.
Origins of Municipal Home Rule
The Early American Years
The principle of home rule, or the right of self-government as to local affairs, existed
before the United States constitution (Alderfer 1956, 147; Weiner 1937, 557; ACIR 1993,
Chapter 3); the principle of home rule, or the right of self-government as to local affairs,
existed before the United States Constitution as stated by the court in People v. State Board
of Tax Commissioners (1903). Local government has been a matter of vital importance since
the earliest colonial times (Graves 1964, 696). The "independence and authority of local
9


government in New England were the objects of universal interest and admiration" (Syed
1966, 29). In fact, "(s)tate dominance of substate governments or local autonomy has been
one of the most controversial issues of state politics since the end of the Revolutionary War"
(Zimmerman 1995, 1).
The Constitution is silent about local government and their concomitant authority and
duties. McQuillan contends a written constitution is never wholly expressive of the
fundamental law of a State; it must be interpreted with reference to a people's settled
convictions (McQuillin 1928, 255). Municipalities (are) also endowed with a certain limited
sovereign power in the sense that while subject to general laws passed by the state
legislature...they have a constitutional right, expressed or implied, to manage their own
affairs free from the interference or control of the legislature" (Eaton 1902, 294).
Alexis de Tocqueville with Democracy in America wrote one of the most remarkable
analyses ever of American democracy and it remains one of the most insightful, detailed, and
generalized studies of the United States (Stillman 1991, 5). The "principle of local
autonomy received inestimable support from Alexis de Tocqueville. His classic work
Democracy in America contains an of the theory and practice of local self-government in the
United States" (Syed 1966, 27). De Tocqueville wrote in Democracy in America, "municipal
institutions constitute the strength of free nations" (Tocqueville, Chapter 5)....A nation may
establish a free government, but without municipal institutions it can not have the spirit of
liberty," (Tocqueville, Chapter 5). In the American context, de Tocqueville noted:
At the time of the settlement of the North American colonies municipal liberty had
already penetrated into the laws as well as the customs of the English, and the
immigrants adopted it, not only as a necessary thing, but as a benefit which they
knew how to appreciate....Thus the nature of the country, the manner in which the
British colonies were founded, the habits of the first immigrantsin short,
everythingunited to promote in an extraordinary degree municipal and state
liberties (Tocqueville, Chapter 18).
For Tocqueville "it was clear that the American system of decentralized government was
preferable to any other state" (Syed 1966, 31). He saw the "localist form of government
10


(giving) citizens the capacity to build, to act, to become government, rather than to merely
resist central authority" (Christensen 1999, 18).
The value of individual freedom espoused in the young nation created an environment
where local government came to enjoy a certain sanctity in the popular esteem (R. Martin
1965, 29). Roscoe Martin describes this doctrine as the "inherent right of local government"
(R. Martin 1965, 29). The doctrine "evolved early as a local counterweight to the
centralizing tendencies set in motion by the new state governments, enjoyed wide support
during the first decades of the Republic. In coldly practical terms, its acceptance in law
would have resulted in local government anarchy for the new nation" (R. Martin 1965, 29).
The early predecessors of the home rule charter "gave the local municipal
corporations very wide local powers, with extensive authority over citizenship, military
establishments, property, trade, transportation, and the right to engage in, or regulate private
business" (Gulick 1966, 45). As charters evolved, and were granted by the states rather than
royal decree, they became increasingly restrictive (Gulick 1966, 45).
The Rise Of The States
America was transformed in the 1800s by the closing of the frontier, impetuous
urbanization, rapid technological revolution, rapid industrialization, international
competition, and new concentrations of private power and new domestic crises (Stillman
1991, 45-50) thereby forcing Americans to do things differently (Stillman 1991, 68); "the
governments of the original colonial states emphasized local rather than state responsibility
for a comprehensive range of governmental services. Both the local emphasis and the
comprehensiveness of public responsibilities reflected important colonial values that had less
significance for people moving west to settle the new nation" (Anton 1989, 45).
As the country developed and matured the states took on an increasing role in local
affairs and became "more of a handicap than a help to cities" (Griffith 1974a, 247);
"(r)elatively tight state control of local governments was a characteristic of the substate
governance system in the U.S. until the post-Civil War period" (ACIR 1981, 5). In fact as


late "as 1875 the federal government was mainly concerned with foreign affairs, the state
government with legislative matters, and the local units with administering the state's
legislative policies" (Keith 1951, 123).
Constitutional financial constraints against municipalities began to appear during the
Civil War period (ACIR 1962, 33). Such provisions "were designed...to protect the people
from local officials and local officials from the State" (ACIR 1962, 33) and were brought on
by financial abuses on the part of the local governments (Zimmerman 1992, 173-174;
Zimmerman 1995, 51) and, in particular, abuses of local discretionary authority (Schaller
1961, 413). Special legislation by state legislatures target municipal operations (Griffith
1974b, 212) leading to state administered municipal functions (Griffith 1974b, 222-223).
The custom of strong local government remained strong within the people of the United
States even as the laws increased state dominance over the local governments (R. Martin
1965,32).
Dillon's Rule. In the 1850s judges began to announce the doctrine of state legislative
omnipotence in relation to local governments (The People ex. re. Fernando Wood v. Simeon
Draper 1857; Mayor v. State 1859; Syed 1966, 65-66). This doctrine expanded and took
hold with "Dillon's Rule" (McCarthy 1990, 18).
Dillon's Rule of state omnipotence originating in the post-Civil War period had the
impact of constraining local discretionary authority; growing dissatisfaction with this trend
in the 1800s led to a countermovement to expand state authority over local government
(ACIR 1981, 17; see Dillon (1911(b)), (Dillon 1911(a)) where Justice Dillon formulated a
definition of municipal powers that serve as the basis for "Dillon's Rule," and City of Clinton
v. Cedar Rapids and Missouri Railroad Co.(1868) for an expanded discussion of Dillon's
Rule).
John F. Dillon was an Iowa Supreme Court justice from 1862 to 1869. He wrote
about municipal law after leaving the bench in A Treatise on the Law of Municipal
Corporations (Dillon 1911(b)). Dillon himself described Dillon's Rule as "a general and
undisputed proposition of law that a municipal corporation possess and can exercise the
12


following powers, and no others: First, those granted in express words; second, those
necessarily or fairly implied in or incident to the powers expressly granted; third, those
essential to the accomplishment of the declared objects and purposes of the corporation,-not
simply convenient, but indispensable. Any fair, reasonable, substantial doubt concerning the
existence of the power is resolved by the courts against the corporation, and the power is
denied" (Dillon 1911, 448). The Iowa Supreme Court case enumerating Dillon's principle
stated "(t)he true view is this: Municipal corporations owe their origin to, and derive their
powers and rights wholly from, the legislature. It breathes into them the breath of life,
without which they cannot exist. As it creates, so it may destroy. If it may destroy, it may
abridge and control. Unless there is some constitutional limitation on the right, the
legislature might, by a single act, if we can suppose it capable of so great a folly and so great
a wrong, sweep from existence all the municipal corporations in the State, and the
corporation could not prevent it" (City of Clinton v. Cedar Rapids 1868, 475). Dillon's Rule
holds that a municipal corporation possesses and can only exercise those powers granted in
express words, necessarily or fairly implied in the expressed powers, or those essential to
accomplishing the purposes of the corporation and no others (Dillon 1911(a); Hyre v.
Brown 1926; Phillips 1954). Thus, "cities and counties have only as much authority and
freedom to govern their own affairs as the state, through its constitution and statutory laws,
chooses to give them" (Krane, Smith, Rigos undated, 4).
Much has been written about Dillon's Rule; "(i)ts influence has been pervasive.
Writers on local government, lawyers, judges have quoted it times without number" (Syed
1966, 68-69) and municipal organizations have called it "the lowest point in the history of
the nation's municipalities" (Lang 1991, 2). From a strict statutory or legal view it had a
significant impact as a guidepost in legal-constitutional relations between the state and its
local governments (Wright 1982, 21 and 229). Dillon states a basic description of his
authority in the case of City of Clinton v. Cedar Rapids and Missouri River R. R. Co. (1868).
"Municipal corporations owe their origin to, and derive their powers and rights wholly from,
the legislature. They are, so to phrase it, the mere tenants at will of the legislature" (475).
The court case establishing Dillon's Rule exemplifies the theory and justifies reiteration here.
13


The City of Clinton, Iowa resisted a particular proposed alignment of a railroad through their
city. The state legislature authorized a railroad company to build a line that would pass
directly through Clinton. The legislature permitted the railroad company to take over,
without paying compensation, as many city streets as needed for completion of the project.
The city sought judicial intervention eventually losing the case mainly on the ground the city
did not possess a property right in its streets.
The Dillon-based "doctrine that local government had no rights under the state
constitution was fully received into federal law" (Libonati 1987, 649). With Dillon's Rule in
mind, the Supreme Court recognized in several leading decisions state supremacy over local
government. The Court held a municipal corporation "has no privileges or immunities under
the Federal Constitution it may invoke in opposition to the will of its creator" (Williams v.
Mayor and City Council of Baltimore 1933, 36), a municipality is merely a department of the
state, a political subdivision created for the exercise of such governmental powers as may be
entrusted to it (Trenton v. New Jersey 1923, 182), and absent of constitutional restrictions,
the legislature may at its pleasure modify or withdraw any powers so entrusted to a city, hold
such powers itself, or vest them in other agencies (Hunter v. City of Pittsburgh 1907, 161).
Dillon's Rule led to the "creature theory." "The creature theory states that the home
rule power may be revoked in the same manner that it was granted, and Dillon's Rule defines
the limits of the power given" (Littlefield 1962, 7). The courts repeated Dillon's thesis in
many states and some years later the United States Supreme Court expressed the same
reasoning, in Worcester v. Worcester Consolidated Street Ry. Co. (1905). In this case the
court stated that "(a) municipal corporation is simply a political subdivision of the State, and
exists by virtue of the exercise of the power of the State through the legislative department"
(548). In the case of Worcester v. Worcester Consolidated Street (1905) the court described
the creature theory as: "A municipal corporation is simply a political subdivision of the
State, and exists by virtue of the exercise of the power of the State through its legislative
department. The legislature could at any time terminate the existence of the corporation
itself, and provide other and different means for the government of the district comprised
within the limits of the former city. The city is the creature of the State" (548-549).
14


Cooley Doctrine. Contemporarally Justice Thomas Cooley (Michigan Supreme
Court) established a competing theory. In the late 1800s Justice Cooley argued a flexible
interpretation of local government freedoms by reaching back into English common law and
pleading that American cities and towns were the rightful heirs to the liberties exercised by
English local governments and that these freedoms were transplanted across the sea to the
early settlements in America (Eaton 1900a, 441). Juris scholars termed his doctrine the
"Cooley Doctrine."
Cooley observes a fundamental principle of government in the United States is that
sovereignty resides in the people (Syed 1966, 63). Syed noted with interest that Justice
Cooley "relies heavily on Tocqueville's Democracy in America" (Syed 1966, 60). Cooley
concluded "the state may mold local institutions according to its views of policy or
expediency: but local government is a matter of absolute right, and the state cannot take it
away" (People ex. rel. LeRoy v. Hurlbut 1871, 108). The controlling principle of the Cooley
Doctrine was "local authorities should manage local affairs and the central government
should concern itself with 'general affairs' only" (Syed 1966, 61). The doctrine had the
greatest support during the 1870s and 1880s (Alderfer 1956; Pate 1954; Gere, Jr. 1982;
People ex. rel. LeRoy v. Hurlbut 1871).
Cooley considered the context during which legislation was drafted, writings of
Tocqueville, Lieber, and Jefferson, and "the colonial struggle for the right of
self-government against centralization" (ACIR 1993, 34). He concluded "local government
is a matter of absolute right; and the state cannot take it away. It would be boldest mockery
to speak of a city as possessing municipal liberty where the state not only shaped its
government, but at discretion sent in its own agent to administer it; or to call the system one
of constitutional freedom under which it should be equally admissible to allow the people
full control in their local affairs, or no control at all" (People ex. rel. LeRoy v. Hurlbut 1871,
108).
The Cooley school assertion, that "localities in the Anglo-Saxon world have enjoyed
the right to self-government" (Syed 1966, 54), did not gain the support Dillon's Rule found.
In fact, Griffith called it a "futile attempt to assert an inherent right of local self-government"
15


(Griffith 1974b, 211). Only Indiana, Nebraska, Iowa, Kentucky, and Texas unequivocally
adopted Cooley's Doctrine (McBain 1916, 198-208). As a result "(t)he prevailing legal
theory has been that in the absence of constitutional protection municipal governments are
totally dependent upon, and subservient to, the will of the legislature" (Keith 1951, 9) but
Cooley Doctrine "articulated a resurgence of values that would soon be embodied in
institutional reforms designed to widen the scope of local choice" (ACIR 1993, 34).
Dillon's Rule is the basis for the "creature of the state" mantra and the Cooley
Doctrine is the foundation for home rule (ACIR 1993). This study will now review how
Cooley's theory was placed into practice.
Municipalities Swing The Pendulum
Although Dillon's Rule authoritatively laid to rest the United States' earliest doctrine
of inherent local rights (R. Martin 1965, 29), communities wanted to meet their needs
independent of state direction -- the agitation for home rule began (ACIR 1962, 7). This
agitation resulted from the general dissatisfaction with the common law status of local
governments as wholly creatures of and subservient to the state legislature as established by
Dillon (Sato and Van Alstyne 1970, 216); thus, "cities and counties have only as much
authority and freedom to govern their own affairs as the state, through its constitution and
statutory laws, chooses to give them" (Krane, Smith and Rigos undated, 4).
Dillon's Rule, as a principle for interpreting narrowly the powers of local
governments, was not only an assertion of state supremacy but also a consequence of the
search for the exact limits of local power (Wright 1974, 131-132). From an
intergovernmental view, the states' action toward their cities has been marked by neglect or
hostility more often than responsible action (Judd and Swanstrom 1994, 300). The
municipal home rule movement "began and gained strength in the political sphere (but)
judges continued to uphold complete state sovereignty over local governments" (Syed 1966,
73). Although Dillon's Rule drew a lucid legal line, politically and administratively "state
16


meddling was resisted by urban people, by urban interests, and by urban reformers" (Gulick
1966, 46).
Local governments feared "the state government would control their right to adopt
their own form of government" (Buechner 1967, 138). Gulick stated that home rule is the
right to participate as an equal partner in arriving at decisions that affect community life
(ACIR 1961, 21). The municipalities viewed home rule as a viable countermove (Bebout
1966) with some municipal officials seeing it as an opportunity to gain a level of parity with
the state (Adrian and Press 1977, 141).
Home rule for cities developed when local government officials recognized the
inferior status of cities under state laws and the difficulty of obtaining needed legislation.
The "agitation for municipal home rule arose before the end of the (nineteenth) century, the
feeling being that certain powers should be within the sphere of local competence" (Bromage
1957, 114). The situation rendered them incapable of fulfilling their primary purpose of
providing adequate services to their citizens (Bolan 1960). Many states adopted home rule
to relieve municipalities from their dependence on legislative action and from the resultant
interference in municipal affairs such dependence enabled (Klemme 1964, 325). The
reforms were driven by a "considerable and growing sentiment for municipal home rule" and
a way to counter special legislation and the desire for a city to find "greater freedom in
adopting new functions" (Griffith 1974b, 270). "This delegation of state authority to local
self-governing units was and is necessary because of the size of most of the states and the
terrific difficulty of knowing and deciding everything sensibly and efficiently from a distant
state capital.
It is also mandated by the American commitment to liberty and self-government and
our belief that democracy is more easily realized, and freedom better preserved, when
governmental activities and official responsibility are 'kept close to the people.'" (Gulick
1966, 33). The intention of home rule is to reverse the Dillon model (D. Martin 1977, 2-4;
Dye 1997, 273); whereas Dillon's Rule prohibits any municipal power or authority not
specifically enumerated in state law, home rule allows municipal power or authority where
state law is silent (see: Fordham 1953). "The history of state-local relations in the U.S.
17


since the Civil War has been marked by constant pressure for expanding local discretionary
authority. The plea for more 'home rule' -- for power 'to take care of our own affairs' is
virtually a conditioned reflex among local officials and their supporters" (ACIR 1981, 60).
Cities become home rule for a variety of reasons (National Civic League, 3; Schaffner
1908). Cities used home rule to restrict state legislative action in one or more of five areas
(Gulick 1966, 46). Gulick outlines these areas as: (1) a guarantee that local governmental
boundaries of incorporated places would not be changed without the approval of municipal
voters; (2) a prohibition against "special state legislation" affecting the property, affairs, or
government of any single municipality; (3) the establishment of a tax system under which the
local government could fix its own local tax rates and thus determine the general level of
services to suit its own people; (4) measures designed to prevent state appointment of local
officials or state abolition of traditional local positions; and (5) authorization to the
municipalities to draw up their own form of government and determine its powers, subject to
general restrictions set for all cities by the state, or to choose among a number of optional
forms of local government defined in a general state law (1966, 46).
Home Rule In Practice. Iowa was the first state to experiment with home rule for
local governments (Baker, B. 1961; Baker, B. 1955). In 1858 Iowa took the first legislative
action to grant municipalities the right to formulate and adopt their own home rule charter
(ACIR 1962, 7). The legislative home rule movement had begun; however, a different
method of home rule constitutional home rule -- would be superior. It is superior because
home rule authorized through state constitution rather than legislative action grants localities
greater protection since the state constitution is more difficult to amend than a statute
(Zimmerman 1992, 172). Constitutional provisions tend to limit the legislature's control over
a municipal corporation (Kneier and Fox 1953).
The 1875 Missouri Constitution marked a key turning point in state-local relations
(Alderfer 1956, 75; Barclay; Bebout 1976, 5; National Municipal League 1974, 4). The
Missouri Constitution "involved constitutional or statutory grants of authority for certain
types of local units to draft, adopt, and amend a charter, and to supersede special laws and
certain general laws" (ACIR 1981, 5). The goals of Missouri's constitutional home rule
18


were: "(1) to prevent or minimize legislative interference in matters that are primarily of
local concern; (2) to permit the local communities to adopt the type and form of government
they desire; (3) to provide the cities with sufficient powers to meet the increasing needs for
local services without the necessity of repeatedly seeking new authority form the legislature"
(Schmandt 1953, 386). This was the start of the constitutional home rule movement in the
United States (Bebout 1976, 4; Patton 1914) and demonstrated the shift from placing
restraints on legislatures to "empowering local citizens with the ability to articulate their
preferences over institutional forms and functional powers within their local communities
(ACIR 1993, 41). Rusco says constitutional home rule is the attempt to change the
constitutionally subordinate position of cities within the state, to some degree, by a
constitutional grant of charter-making and substantive powers (Rusco 1960).
Without a state constitutional grant or legislative guarantee of home rule, local
governments have no authority independent from that granted by state law (Florestano and
Marando 1981, 4). Home rule grants authority to municipalities to make certain decisions
and constrains the activities of the state and other governmental units relative to the home
rule municipality (Hawkins 1976, 88); "(i)f municipalities are free to manage their own
affairs, they can respond more promptly to the needs and conveniences of their citizens, and
deal quickly with new problems as they arise" (Lieberman and Morrison 1994, 1463).
The Study Of Home Rule. The late 1800s also marked the beginning of the
academicians' focus on municipal governance. Frank Goodnow's 1895 publication entitled
Municipal Home Rule is one of the earliest texts in municipal political science. Goodnow
considered Dillon's "administrative arm of the state" argument and concluded when a
municipality was acting as an organization for the satisfaction of local needs it should suffer
interference from neither the courts nor the state legislature (Goodnow 1895, 45-55, 225).
Frank Goodnow explains that home rule should offer citizens the conviction that they have
the power to work a sensible improvement in their condition in his early writing on home
rule (Goodnow 1895, 9). The National Municipal League (now the National Civic League)
began publishing its model city charter in 1899 (National Civic League 1989). Goodnow
19


continued, in 1906, addressing many of the early questions about the concept of home rule
(Goodnow 1906, 77). In 1928, Schuyer Wallace argued the pros and cons of home rule
contrasting a centralized versus decentralized approach to government in the areas of public
health, finance, education, utilities and other functions.
The Growth Of Home Rule. "By 1920, constitutional home rule was available to
some municipalities (usually the most populated ones) in 13 states, and home rule by
legislative grant was available in 6 other states" (Richards 1967, 76 (parenthesis in
original)). "The resulting protection of the cities against the state, which in law had the right
to make and unmake cities...was written into (law) or became a part of unwritten law under
the pressure of widespread public opinion" (Gulick 1966, 46).
Since 1955, home rule gradually extended to counties besides municipalities (Graves
1964, 700). Although "over the years, the view that local governments should have home
rule or greater discretionary authority has gained ground over the creature-of-the-state
position" (Berman 1996, 35) in the 1960s forty-eight states (excluding Texas and Alaska)
remained Dillon states where no local power exists unless it is expressly delegated or clearly
implied (ACIR 1962, 43). "Dillon's Rule and the creature theory operated together to give
doctrinal expression to the state-local relations prevailing in this country" (Littlefield 1962,
7).
Dillon's Rule has been chipped away in the fifty states as lawmakers and citizens
strive for aggrandized local control (Rhyne 1980). Zimmerman notes "in the late twentieth
century, many municipalities possess relatively broad discretionary powers while other (local
units of government) are subject to tight control by the state government....This trend has
been toward the granting of additional discretionary powers to (municipalities), but state
legislatures with a few exceptions continue to possess authority to dominate local
governments completely" (Zimmerman 1992, 165). Contemporarily, to "circumvent Dillon's
Rule, many states have constitutional provisions or statutes that confer 'home rule' or broad
discretionary authority on local governments, giving them the right to make decisions
without specific grants of authority" (Berman 1996, 34). The theory of home rule grants
20


sweeping powers to cities; however, in practice, home rule has not brought self-government
to cities (Dye 1997, 274). This is due primarily to the difficulty in specifying specific areas
of authority, the changing municipal landscape (resulting from urbanization) and fiscal
issues. These issues will be examined further in the following sections.
The Line Between Municipal And Statewide Concerns
This Nation's "federal structure, a unique product of the U.S. Constitution, parcels out
authority among the various levels of government, federal, state, and local" (Stillman 1980,
127). Waldo pragmatically noted in the Constitution "the separation of powers is
thereprominently and, for our purposes, permanently" (Brown and Stillman 1986, 153
(emphasis in original)). However, the role of local government in this constitutional system
is not as clear ~ local government is not "there" with permanence in the Constitution.
Home rule allows the state to focus on statewide issues and the local governments to
focus on local issues (Committee for Economic Development 1966). Home rule developed
"partly to prevent (a state from having) continuous political confrontations with local
officials and partly to ease its agenda for dealing with statewide issues"; it is a "means for
granting local units a measure of discretionary authority in a variety of fields" (Wright 1982,
356).
Drawing a clear line between local and statewide issues is difficult (Stedman 1975,
46) and by nature controversial (Bromage 1957, 117). As transportation, health,
environmental, development pressures, and financial problems become multijurisdictional in
nature the boundary of home rule authority the line between municipal and statewide
issues -- becomes blurred.
Throughout history, "responsibilities were more divided than shared. The states and,
through them, local governments were preeminent in domestic policy" (GAO 1990, 10).
Tocqueville again provides a strong basis for the separation of governmental functions.
Tocqueville "found that in its relation to the state, the township, as a corporation, was
21


sovereign like any individual" (Syed 1966, 28). To understand the consequences of the
separation of government:
it is necessary to make a short distinction between the functions of government.
There are some objects which are national by their very nature; that is to say, which
affect the nation as a whole, and can be entrusted only to the man or the assembly of
men who most completely represent the entire nation. Among these may be reckoned
war and diplomacy. There are other objects which are provincial by their very nature;
that is to say, which affect only certain localities and which can be properly treated
only in that locality. Such, for instance, is the budget of a municipality. Lastly, there
are objects of a mixed nature, which are national inasmuch as they affect all the
citizens who compose the nation, and which are provincial inasmuch as it is not
necessary that the nation itself should provide for them all. Such are the rights that
regulate the civil and political condition of the citizens. No society can exist without
civil and political rights. These rights, therefore, interest all the citizens alike; but it is
not always necessary to the existence and the prosperity of the nation that these rights
should be uniform, nor, consequently, that they should be regulated by the central
authority" (Tocqueville, Chapter 18).
Tocqueville "noted that even though the townships were no longer wholly independent, they
were subordinate to the state only in matters that were state-wide in scope. In their local
concerns they were still free" (Syed 1966, 28-29).
This division holds true with the relationship between the state and local
governments. Gulick says the essence of the division of these functions rests on geography,
the ability of the government to support costs, the population served, the "age" of the
activity, uniformity of control, and if the failure to perform the function can be damaging to
people in other jurisdictions (Gulick 1966, 42-44). Referring to geography, Gulick contends
if the service is required across the state it should be a state function; by ability to pay,
Gulick suggests the government able to afford the service should undertake the activity;
population served considers beneficiaries if the local population benefits it should be a
local function, if the population is highly mobile a broader government should oversee the
activity; with age of activity Gulick suggests the government undertaking an activity for
many years should continue undertaking the activity even though the activity
contemporaneously may be undertaken by a different level of government; with uniformity
22


of control, Gulick suggests if an activity requires broad uniformity (for example, a
regulation) the broader government should head the activity; finally, if the activity, or lack of
undertaking an activity can be damaging to people in other jurisdictions Gulick suggests "the
function is unsuited to local control and, if required, becomes a state function" (Gulick 1966,
42-43).
There are statewide concerns, local concerns, and shared concerns (ACIR 1981, 12)
and for the most part the courts have had to define the realm. Home rule cities have
authority over local and municipal matters superseding state law (Mutz 1994, 2771).
Regardless "of the source of municipal power, the principle of home rule has been limited in
application to matters of purely local concern. Thus, municipalities are not empowered to
act in matters of state interest" (Nolan 1993, 505). These individual powers are important
for "(i)f home rule is to mean anything...it must be home rule in particular matters"
(McGoldrick 1933, 303).
Lorch explains that "disputes about what is statewide and what is local usually center
on powers claimed by home rule cities" and defining "just where (lies) the line between
statewide and local is often fought out in court battles between home rule cities and the state
when their separate claims to power collide" (Lorch 1983, 288). For example, the manner in
which municipalities annex territory often is a statewide concern since annexation involves
people beyond the municipality's boundaries. Elazar believes home rule does not change
much in the state-local balance because most issues are of state concern (Elazar 1994, 287).
Further, if someone challenges the issue in court, the court may apply Dillon's precedent thus
leading the court to side with the state and decide the challenged issue to be of state concern
(Saffell and Basehart 1997, 234).
Anderson, Newland, and Stillman suggest the issues at the "heart of the matter for
local governments (are) how free they are to undertake the provision of services their
citizens need or want, what taxes the community is permitted to utilize, what debt it can
incur, and the limitations on the state legislature in imposing costly mandates or exempting
certain types of property from the local tax base" (Anderson, Newland, and Stillman 1983,
194).
23


Defining Statewide Versus Local Concerns. Each state defines differently the line
between state, local and mixed concerns (ACIR 1981, 13). Within Colorado for example, to
distinguish local versus statewide concerns, the Colorado courts use a test (Denver v. Bossie
1928; People ex. rel. Hershey v. McNichols 1932) where "the state may enact overriding
provisions where there is a question of public policy" (Littlefield 1962, 19). Since "home
rule powers are intended primarily to allow the local government to address local problems,
the state courts will decide whether a particular issue is only a local concern and thus ruled
by the home rule charter or is a matter of statewide interest governed by general state
legislation" (Bingham, R. 1991, 62).
Generally, state matters include: the administration of justice, the maintenance of a
police force, fire protection, public health, sanitary regulations, conservation of resources,
education, neglected or delinquent children, elections, public records, control of streets and
traffic, public utility rates, conditions of work for municipal employees, boundaries,
indebtedness, and taxation (McQuillin 1940, 561-565). Local matters generally include:
street construction, special assessments for improvements, maintenance of sewer and drains,
parks and playgrounds, eminent domain, providing water, light, and other utilities, municipal
officers, municipal taxes, forms of local government, and salaries of employees (McQuillin
1940, 566-570). However, "(i)t is generally recognized that the broad police power of the
state can be delegated to local and municipal government; when so delegated, the police
power of a county or city is as broad as the police power exercisable through the legislature
itself' (Farrar 1996, 54).
Urbanization has increased the challenges of separating realms; "many problems of
the metropolitan area-the problems of the 'urban fringe,' the problems of the downtown area
and of the slums of the core city, the problems of area transportation, of water and sewer
supply, of regional planning and zoning, and the problems of the economic growth and
development of an urban complex-present at the same time local and more-than-local
problems. It is not enough to say that because a metropolitan area transcends an
incorporated city's boundaries that the problems thereof become a statewide concern"
(Littlefield 1962, 4).
24


The state and local debate is active in the government finance arena. For example,
the courts have held that taxing by a municipality for revenue purposes is strictly a municipal
affair (West Coast Advertising Company v. City and County of San Francisco 1939). Lorch
explains that a typical home rule city may think levying a sales tax is purely a matter of local
concern whereas many states courts consider the kind of taxes levied within the state a
matter of statewide interest (Lorch 1983, 287-288).
Judiciary Involvement. Some have argued this judiciary involvement has weakened
legislative authority for both municipalities and the states by whittling "...down the grant of
home rule authority to the point where the municipalities are powerless to act" (Schaller
1961, 413). Researchers say this judicial involvement is symptomatic of the increased role
of the judiciary in government (ACIR 1993, 33). Dye asserts home rule results in
strengthening courts, attorneys, and defenders of the status quo (Dye 1997, 274) and Berman
believes "(i)n practice, the actual scope of authority in every state is heavily influenced by
judicial decisions. How state courts define the extent of local powers varies greatly from
state to state, even when essentially the same home rule law is involved" (Berman 1996, 34).
The conflicts over local versus statewide functions "that materialized were placed
before the courts, and it was the judiciary's unhappy lot to decide how much home rule was
offered by the constitutional authorization to frame city charters. Unquestionably it was
somewhat easier in those early days to delineate local powers from state powers, and the
courts set about to do so at will. However, they soon became hopelessly enmeshed trying to
separate powers in the so called 'twilight zone' which exists between matters of state and
local concern" (Keith 1951, 125-126). The courts have been a problem for the home rule
municipalities (Griffith 1974b, 211). Since "there are so few subjects which are of
exclusively state or local concern, most courts have been forced to declare that more and
more powers are within the jurisdiction of the state. The ultimate outcome of the process
will be the complete destruction of home rule" (Keith 1951, 129).
What has actually happened is that home rule has taken much of the decision-making
power from the state legislature but instead of being put in the hands of the local officials
25


that authority either has been assumed by the judiciary or lost in the jurisdictionally gray
area between state and local governments (Schaller 1961, 413). Judicial "rulings rested
largely on the particular way in which a state established its home rule policy" (Bromage
1957, 115). McGoldrick predicted the difficulty in drawing lines between statewide and
local concerns will ultimately all but destroy home rule because the number of matters
assignable completely and exclusively to local discretion will be few (McGoldrick 1933,
317). Court decisions "rendered many a city impotent in important particulars" (Griffith
1974b, 212).
Legislative Involvement. Since McGoldrick, municipalities have sought to strengthen
their positions by better defining state and local issues. Demonstrably, "the courts realized
the value of home rule as a broad political concept; but, when confronted with the reality of
gouging out of the state's jurisdiction numerous powers which the state might be called upon
to exercise at some future date, they reneged. Consequently, the frequent legal victories of
the state over the municipality prompted other constitution writers to do their best to make
more definite the grant of power" (Keith 1951, 126). For example, Colorado cities have
power over all municipal and local matters (see also, New York, California and Ohio).
California and Colorado both have constitutional amendments conferring "specific powers
on localities after such powers had been declared by the courts outside the scope of the
original general grant of power....The constitutions of Oklahoma, Michigan, Ohio, Utah, and
New York also contain some degree of specification. Furthermore, the enabling acts of such
states as Minnesota and Texas establish what amounts to a legislative definition of
'municipal affairs'" (The Council of State Governments 1946, 164).
Saffell and Basehart (1997) note "even when home-rule powers are extensive and
self-enforcing, cities are by no means free from state supervision" (234). If the state law
enables municipalities freedom with municipal issues "as a practical matter the
administration of a city government does not become protected from state interference"
(Littlefield 1962, 19). In fact, one should not exaggerate the independence from the state
legislature home rule provides (Banovetz and Kelty 1987, 11). ACIR notes "(l)ocal
26


immunity may be easily overridden by a state statute treating the policy problem as one of
'statewide' rather than exclusively 'municipal' concern" (ACIR 1993, 16). Home rule charters
"do not constitute an absolute grant of local self-government to the municipality. The
powers granted are only those that pertain to matters of exclusively local concern. To the
extent that general law charters already grant such powers to municipalities and many do
the achievement of municipal home rule may prove to be a hollow victory" (Baker, J. 1971,
46).
In dividing functions, "once a locality decides to establish its own local governmental
organization to meet its many special local needs, there is much common sense in letting that
organization undertake also various localized 'state functions' so as to avoid another layer of
local administration" (Gulick 1966, 45). "Although home rule was the result of a local desire
to move away from complete legislative control by the state, it was never intended to create
municipal autarky from the state. Rather, the concept was intended merely to allow
governments to operate more effectively" (Nolan 1993, 505). But through court
interpretations of functions research finds smaller and medium cities "have some freedom in
determining the general structure of their city governments, but home rule often only slightly
increases their substantive powers. For when all is said and done, the state legislature and
governor usually control most of the assets and much of the political clout" (Bums, Peltason,
Cronin, and Magleby 1984, 201).
There are, however, advantages for the state in having municipalities with strong
home rule authorities. The separation of state and local government "is justified on grounds
that local self-control is a positive good and must be maximized by allowing every locality
the right to exclusive authority over those functions natural or suitable to local control"
(Bums, Peltason, Cronin, and Magleby 1984, 201; Grodzins 1966, 320).
The Report of the Committee on State-Local Relations of the Council of State
Government outlines the many disadvantages of increasing the prominence of state
legislation dealing with local issues (Council of State Governments 1946, 146-148). The
disadvantages of legislation focusing on local matters include: the burden of local legislation
makes undue demands on the time and energy of members of the state legislature; it
27


accentuates the feeling of localism in state legislatures; it encourages log-rolling among
members; legislators cannot take the time to understand each measure introduced; it causes
instability and confusion in local government; local affairs are brought into the arena of
statewide politics; and it removes control of local government from the hands of local
citizens where it belongs (Council of State Governments as cited in Alderfer 1956, 149).
Legislators and jurists have continued their attempt to define the line separating
municipal and statewide concerns resulting in the original relationship between the national,
state, and local governments being altered considerably (Buechner and Koprowski 1976,
140). For example, home rule authority has prevented state interference in city-county
contracting, pooling of local revenues, and combining governmental functions (Colman
1975, 22-23). As described below, urbanization and the growth of and within the
municipalities further blurred the demarcating line for home rule -- the distinction between
municipal and statewide concerns.
Two Paths For Municipal Home Rule
Missouri's constitutional grant created a "state within a state" system where the local
government controlled local affairs and the state government had authority over statewide
issues and concerns (Elazar 1972, 88). This state within a state approach envisioned a dual
state and local sovereignty along the national model of federal and state governments (ACIR
1981, 19). In fact, state-local relations "reproduces in miniature...a great many of the same
problems encountered in the field of Federal-State relations; the psychology of the two
situations is closely parallel" (Graves 1964, 705). This model gives broad general authority
to local governments to pass laws and ordinances relating to local affairs, property, and
government with specific enumeration of certain powers (Buechner 1967, 139). Neither the
principle of independent concurrent sovereignty nor the attempts to develop clear divisions
of state and local authority have prevailed (Valente 1987, 103). This approach is inflexible
since a municipality needs a constitutional amendment to change the distribution of authority
and narrow judicial interpretation has limited the scope of local affairs (ACIR 1981, 19).
28


A second approach to home rule referred to as "devolution of powers" evolved in
1953 as outlined by Jefferson B. Fordham (Fordham 1949, 74-79). The state within a state
approach left to the judiciary to define the line between statewide and local affairs (Coe
1982, 113). Fordham's approach rejects the state within a state approach and removes the
judiciary from the task of determining the dividing line between state and local powers; this
responsibility instead shifts to the state legislature (Coe 1982, 113). It requires positive
enactment to deny power to home rule municipalities (Buechner 1967, 139). The effect is
"local governments can exercise any power the legislature has power to devolve on a
non-home rule city, and which is not denied by general law or by their home rule charter"
(Coe 1982, 113-114). Buechner considers such a home rule charter an instrument of
limitation-the local government has all the powers potentially available under a state
constitution by legislative delegation except as limited by the charter or statute (Buechner
1967, 140).
Some public administrators continue to examine a preferred basis for home rule.
Vaubel provides a general evaluation of home rule where he examines state control, its
application and its scope (Vaubel 1991, 845). His proposal is that a state should adopt a
constitutional provision that reads: "A municipal corporation may exercise any legislative
power or perform any function within its boundaries that is not in conflict with state police
power regulations applied to individuals, private groups or private corporations statewide."
The National Municipal League argued the need for a good, strong charter (National
Municipal League 1952) and Gulick suggested a municipality should have broad discretion
to design the form and structure of its own local government directly through a home rule
charter (Gulick 1964).
Both the state within a state and devolution of powers approaches are in use today
(Littlefield 1962, 68). The Advisory Commission on Intergovernmental Relations
recommended in 1962 (ACIR 1962, 72) and reaffirmed in 1981 (ACIR 1981, 8) their
devolution of powers approach as the preferred basis for municipal home rule.
29


Home Rule And Metropolitanization
The contemporary home rule movement had its beginning in the Progressive Era of
the early twentieth century (Adrian and Press 1977, 138; Catherwood 1997, 19; ACIR 1962,
8; Griffith 1974a, 123). This Era was a reaction to perceived abuses by the states to the
cities (Goodnow 1904, 33-34) and sought to discern politics from administration at least
insofar as administration would be more businesslike and scientific (Box 1999, 26). Around
the tum-of-the century the emphasis of reform efforts was on the form and structure of
municipal government (ACIR 1962). The value of administrative efficacy, or
"neo-Hamiltonianism," set the stage for the Progressive Era with the gradual broadening of
public action, enhanced professionalism, and strengthened executive management and
organizational autonomy (Stillman 1996, 370).
The National Municipal League was "a consistent advocate of municipal home rule
since its inception in 1894" (Syed 1966, 87) and one of its members, Horace Deming, wrote
about the developing issue of home rule (Deming 1909). He argued against the perception of
municipalities being primarily administrative and instead emphasized municipal decisions
affect citizens' vital interests; thus, citizens should be able to be more involved in local
policymaking (Deming 1909).
By 1915 fifteen states implemented constitutional home rule provisions (Graves 1964,
703-704). However, the growth of the once promising home rule movement slowed as a
result of the growing complexity of state-local relations (McGoldrick 1933; Mott 1949,
60-62) and the increasing ability to reform state constitutions thereby providing
municipalities greater non-home rule latitudes. By 1925, as a result of the National
Municipal League, fourteen states granted home rule charters to their cities (Stewart 1950,
98). By 1930 sixteen states had adopted provisions for constitutional home rule only one
more than in 1915 (Graves 1964, 704). Home rule rights, much fought over from 1876 to
1923 were slowly diminishing as a result of the Great Depression and subsequent changes in
the American economic, social, and political system (Gulick 1966, 47).
The initial drive of home rule was when the city represented a separate organic, social
and economic community (Lee 1962). The urbanization of the United States played a key
30


role in the evolution of municipal government (Stillman 1974, 6). "The intensified
urbanization of the nation in the latter part of the nineteenth century, fed by streams of
immigrants from abroad and nurtured by the economic revolution growing out of
technological changes, had produced a need for greatly increased governmental activity"
(Sato and Van Alstyne 1970, 216). "In 1790, when the first national census was taken, 95
percent of the people lived in rural areas, rather than in urban centers" (Richards 1967, 43).
1919 marked the first year more people lived in urban rather than rural areas and the
urbanization trend continued to accelerate markedly (Baumheier, Morton Derr, and Gage
1973, 3-5).
Home rule "goes toward assuring large cities and other (governments have) freedom
of action in confronting a myriad of problems in contemporary life, as contrasted with
traditional dependence upon the legislature for enabling legislation as to authority, structure
and procedure" (Fordham 1975, 70-71). Strong city-self government was a strategy for
confronting the horrible conditions of city life in the early twentieth century (Fox 1977, xvi).
Municipal home rule was a method of strengthening city self-government and enhancing a
sense of community (Bums 1994, 50; Griffith 1974a, 123).
Home Rule Evolution. Joseph D. McGoldrick in 1933 held the home rule movement
appears to be fading like all fads (McGoldrick 1933). However, home rule continued to
evolve and grow throughout the twentieth century (Buechner 1964, 3-7) and experienced a
revival in the post-war years as the Country continued to urbanize (Graves 1960, 704).
Schaller found at least four aspects of home rule's value to municipalities in the rural to
urbanized transitional period (Schaller 1961, 402).
First, home rule has provided for variations in the structure of government. The
growth in the number, variety and complexity of our cities has made it highly desirable to
have a form of government that could adjust itself to local circumstances. Home rule has
encouraged and facilitated changes.
Second, home rule has helped state legislators by relieving them of many of the local
bills that used to be a great burden to their predecessors. Zimmerman discussed this
31


advantage above and Schaller further asserts both city and state officials owe a word of
thanks to the growth of home rule for freeing them from constraints in solving purely local
problems. Schaller notes as example that out of the 283 bills enacted into law by the
pre-home rule Indiana legislature in 1953 122 related to local matters representing a
significant loss of time to a legislature limited to a 61-day biennial session (403).
Third, home rule has sometimes provided a satisfactory solution to the jurisdictional
problems plaguing so many urban centers such as cross-jurisdictional population growth
challenges. The home rule concept has encouraged cities to attempt solutions to their
problems without continually running to the state legislature (404). Finally, home rule, as
Zimmerman noted, encouraged greater citizen participation in their new urban governments
(Zimmerman 1992, 173).
Schaller also notes drawbacks of home rule in the transitional era. First, home rule
obscures alternative solutions to basic problems; as example, one could only speculate on
what might have happened if city officials had turned to the state for assistance rather than
independence. Second, home rule provided an excuse for legislators to ignore urban
problems just at the time when the states should have been giving more attention to the
plight of the cities (406). Home rule limits the state's ability to meet the challenge of
"suburbanites," one of their most important problems (Bosworth 1967, 308).
A final note of Schaller's is the apparent paradox that at the same time the home rule
campaign has continued, the number of municipal government operations that are of local
concern is diminishing while the functions and services that are state-wide concerns is
increasing. He cites as examples highways, public health, water pollution abatement and
urban renewal (Schaller 1961, 407). Similarly, the suburban growth pitted home rule cities
against home rule cities often forcing the issue as a state-wide concern (Schaller 1961, 407).
Graves agrees "most important of all is the fact that with a growing realization of the
problems of metropolitan areas, municipal government ceases to be a matter of purely local
concern. What happens to its cities is a matter of concern to the whole State and, in some
respects, even to the Nation" (Graves 1964, 710).
32


Schaller concluded in his 1961 writing Americans have had too much home rule
already. Home rule is the basis for many of the problems in the nation's metropolitan areas
and has been made the excuse for many inexcusable developments such as the growth of the
independent (from the central city) suburban governments, the lack of regional planning, and
financial problems.2
Metropolitan Challenges. Dwight Waldo said "Luther Gulick is by any measure the
outstanding citizen of our realm of public administration" (Brown and Stillman 1986, 132
(emphasis in original)). He wrote much about public administration and municipal science.
In 1962 he "discussed the nature of metropolitan problems. These problems, common to the
metropolis-slums, crime, mass transportation, and education-are, according to Gulick,
insoluble by local units of government alone because they are issues which transcend local
government boundaries. The shortage of adequate services to the urban resident, the lack of
comprehensive planning for the general development of the urban area, and a local of a
region-wide democratic machinery for teamwork have occurred because 'our approach, our
theory, was wrong....' (Gulick 1962, 125)" (Buechner 1967, 141). Gulick in 1966 listed "the
current American metropolitan explosion" as "the major domestic problem of our
generation" (Gulick 1966, 2) and that "the major unsolved problems of our society and
government arise primarily from the new rapid urbanization of the country" (Gulick 1966,
9). "The high degree of urbanization which has occurred in the United States poses many
serious problems for the governmental and social process. Education, transportation, public
health, law enforcement, public services, welfare, and housing are just a few subjects which
are commonly considered major concerns in urban areas" (Beam and Buechner 1968, 356).
The urbanization of the Nation has led to new challenges in state-local relations
(Florestano and Marando 1981, 7). The "metropolitan pattern of human settlement as it has
evolved on this continent is a radically new design for living and working" (Gulick 1966, 3).
The rapid urbanization of the United States has resulted in scholars and academicians
seeking methods to continue productively delivering urban services (Gage and Sloan, Jr.
The financial problems will be discussed more fully below.
33


1976). Gulick wrote The Metropolitan Problem and American Ideas to "try to draw out of
American experience and theory those elements which seem to (him) to have a direct bearing
on the metropolitan problem, and on this basis to suggest the main elements of a new
approach for American political action" (Gulick 1966, 4). Denver is one metropolitan area
that has looked at combining governance functions to facilitate delivery of urban services
(Denver Metropolitan Study 1976).
The urbanization and evolving governmental relations prompted action by the federal
government to establish the Advisory Commission on Intergovernmental Relations (ACIR)
(Gulick 1966, 132-133). Congress formed the ACIR on September 24, 1958 to "consider, on
its own initiative, ways and means for fostering better relations between the levels of
government" (Stillman 1982a, 44). The purpose of the ACIR was to make a real attempt to
include all levels of government and to make the ACIR a responsibility of the President; also
the ACIR was designed to be permanent with the hope it would not end its service once it
prepared a report (Buechner 1967, 45).
Local Government Grows. Urbanization led to an explosion in local government.
Local government employed 10.9 million in 1991 versus 3.2 million in 1950; more local
government employees than in either the federal and state governments combined (10.9
versus 9.7); largest growth of the sectors both numerically and by percentage (Stillman 1996,
70). The "number and size of local governments within a definable geographic area has led
to the rise of the metropolis.
If one carries the home rule doctrine to its ultimate conclusion, one can foresee
numerous semiautonomous municipal governments, each operating within its sphere, within
a metropolitan area (Buechner 1967, 140). This has meant for urban America the rise of
numerous entities, each different in form and in character with few means for governmental
coordination or cooperation" (Buechner 1967, 140). Urbanization and metropolitanization
have caused many difficulties for local government including problems of adjusting public
services to the new influx or out-migrations of people, dealing with a rapidly shifting
34


demographic composition of local populations and clientele groups' demands for those
public services and financial challenges (Stillman 1996, 284-286).
These challenges brought on by urbanization led some to question the continued
effectiveness of home rule (Gulick 1966). Buechner concluded "local governments within
the metropolitan areas will have to acknowledge that the home rule principle cannot be
carried to its logical conclusion" (Buechner 1967, 154). Urbanization creates a need to
centralize governmental functions that runs essentially counter to the demand for home rule
(Schaller 1961, 408). Further, "catch phrases like...'home rule' serve only to arouse
emotional responses and to becloud the real issues" (Graves 1964, 705).
Schaller concluded that home rule will soon be considered an obsolete theory
(Schaller 1961, 414). The most important reason is that more and more states are becoming
predominantly urban in character. It is inconceivable that the legislatures in such states will
surrender control over these clusters of population that account for the largest share of the
state's wealth, power and votes. (Schaller 1961, 414). A second reason is that more and
more problems that formerly were "local" in nature are now metropolitan or regional in
scope. With the emergence of large metropolitan centers, municipal government no longer is
a matter of local concern (Schaller 1961, 415). There is no clear-cut evidence that states
with home rule provisions have had better urban government than other states (Schaller
1961, 413). Burgess predicted the judicial and legislative authority of the state would
gravitate toward the national government while their police powers would move toward the
municipalities and that the rapidly increasing power and influence of the urbanized
metropolis might eventually push the state out of American governance (Burgess 1886, 32).
The history of home rule is marked by state-local relations the changing power and
authority of municipalities relative to their states, the extant struggle to separate state and
municipal issues and the evolving environment resulting from urbanization. The next section
will briefly discuss how the urbanized environment refocused the discussion of home rule
powers and authorities to the areas of finance and interlocal relations.
35


Contemporary Home Rule: Finance
and Inter-Local Relations
Contemporarily "some degree of home rule is available for municipalities in
forty-eight states" (Berman 1996, 33), about two-thirds of the nation's cities with populations
greater than two-hundred thousand have some form of home rule (Dye 1997, 273) and more
than eighty percent of the states have rejected Dillon's Rule or have changed it to recognize
the residual powers of local government (Elazar 1984, 203). As described the issues
prompting home rule and the challenges the municipalities must face have evolved
throughout the twentieth century. Two of the assiduous and key ingredients in the evolution
have been revenue and authority. The "autonomy of the (municipality) in advanced
industrial societies derives from a mix of factors: its historical formation, constitutional
status, revenue base, power relations between national and local political elites,
incorporation of societal groups, and so on. These sets of factors can be reduced to two
dimensions: the autonomy of the (municipality) in advanced capitalist societies at any given
historical juncture is a function first of its relationship with local economic and social
groups, and second of its relationship with the national or central state" the former provides
revenue and the latter has legislative power (Gurr and King 1987, 55-56). Here this study
will look at authority in terms of municipal relations after an examination of the revenue and
finance environment.
Financing Home Rule Authority
Near the policy core of intergovernmental relations have been fiscal issues (Deil S.
Wright in Stillman 1980, 127); "intergovernmental relations concern matters that are both
fiscal and non-fiscal in nature. Fiscal considerations are paramount, however, since they
involve the capacity of government, at both the state and local levels, to develop and carry
out effective programs of public services while, at the same time, preserving financial
stability" (Report of the Governor's Tax Study Group 1959, 415).
36


Urbanization led the federal government to take an aggrandized role in urban issues
where the bulk of the population resided. Cities are growing rapidly and the federal and
state governments continue to mandate upon and meddle with the local government revenue
base (Gage 1986, 160). This created the "ability of local governments to go directly to the
national government for assistance that state governments are unwilling or unable to
provide" (Berman 1996, 52). Municipalities came to depend on the federal government for
funding while the federal government began to rely more on the municipalities to spend the
money to meet federal goals (Christensen 1999, 48). In addition, "there has tended to
develop a pattern of direct national-local relations in some...functional areas which has
prevented the States from exercising their rightful role in the Federal system" (ACIR 1961,
43). There is an unwillingness of many state governments to increase the ability of local
subdivisions to tap alternative revenue sources (Banovetz, Dolan and Swain 1994, 326).
The pecuniary portion of such assistance was a hot-button. Discussion heated in the
1970s about intergovernmental fiscal relations and the issue of whether Congress should
appropriate federal grant and aid dollars directly to the municipalities rather than the
traditional route through the states (Dommel 1974). Gulick asserted local government
financing becoming more closely tied to grants would result in an erosion of home rule
because of local governments' increased reliance on federal and state money (Gulick 1957,
559).
The federal financial assistance to states and localities peaked in 1978 (GAO 1990,
12). The resulting "cuts in federal aid affected localities more than states; "states were
enjoying a larger share of a smaller pie" (GAO 1990, 16). The role of the state has become
more prominent in state-local relations (Gage 1986, 155). State aid to cities increased as a
result of the drop in federal aid and cities began to raise more of their own revenue (GAO
1990, 23).
The states also have been gaining prominence in local government finances (Adrian
and Press 1977, 255). This state prominence is not entirely positive for local governments;
having the states paying for local services tends to "decrease citizen interest in problems of
local government and therefore to decrease the meaning of democracy in the United States"
37


(Grodzins 1966, 321). Fiscal constraints states have placed upon local governments affect
the state-local relationship (Banovetz, Dolan and Swain 1994, 320). Further, "the rate of
increase in core city expenditure requirements has continued to strain local tax bases and has
forced an increasing reliance on external financing of urban public services," which has
increased municipalities' dependence on state and federal funding (Bahl and Vogt 1976, 96).
Other scholars connote this dependence may be not much more than financial dependence.
Local governments often push fiscal burdens onto other units of government while still
maintaining local control over how the money is to be spent (Florestano and Marando 1981,
39-40).
The financial implications of home rule vary by state (Paddison and Bailey 1988,
88); they range from great to non-existent (Sweeney 1965, 33). Municipalities "in 38 states
possess the least discretionary authority in the area of finance. The major exceptions are
cities in Arizona, Illinois, Maine, and Texas" (ACIR 1981, 49).
Financial Implications. Bucholz examines municipal home rule as a method by which
cities can improve their revenue pictures (Bucholz 1961, 47). Martin found most home rule
municipalities actively seek revenue authority (D. Martin 1977, 13). The Coalition to
Improve Management in State and Local Government recommended simplifying the process
for adopting home rule as a method by which municipalities could improve their ability to
finance local service delivery (Coalition to Improve Management in State and Local
Government 1992, 76).
The Chicago Home Rule Commission thoroughly reviewed the finances of home rule
(1954, 286-308). The Commission noted how the courts have cut down the revenue powers
given cities; "It does not appear that constitutional home rule, except in the limited instances
noted, has given cities any greater measure of revenue powers than that which exists in
non-home rule cities" (Chicago Home Rule Commission 1954, 303). The limited instances
noted were California, Ohio, Missouri, and Colorado (Chicago Home Rule Commission
1954, 299-303). Home rule municipalities are able to alter their financial positions relative
38


to non-home rule municipalities but not often to the extent they are able to alter their
structural, functional and personnel positions (ACIR 1981, 12).
Many municipalities "enjoy some measure of home rule though the variation between
states and amongst local governments within single states remains considerable...(there is a)
willingness to consider alternative methods of organizing revenues" (Paddison and Bailey
1988, 88). Home rule may increase discretionary authority but "regardless of the amount of
discretionary authority granted by the state constitution...the key determinant of the ability of
a local government to exercise fully the grant of powers is adequate finance," (ACIR
November 1981).
Home rule municipalities have financial authority but in every state fiscal constraints
such as reductions in debt limits, tax limits, or lack of revenue reduce local discretionary
authority (ACIR 1981, 8). With "finances, the key issue for local officials is the extent to
which the regional economy provides sufficient revenues, through taxation, to support the
local state (i.e., municipalities)" (Gurr and King 1987, 35). All too often local governments
have more home rule authority than can be financed through their "home rule' tax resources
(Schaller 1961, 414). Given a choice between the traditional plea for home rule and
financial solvency, local officials choose to go with the latter (Kincaid 1978). In an era of
complex and interdependent intergovernmental relations financially healthy state
governments and financially struggling local governments perhaps home rule is an idea
whose time may have come and gone (Elazar 1976).
Local governments apparently will continue to struggle with financial issues. Can
home rule still be an asset? Morton Grodzins went so far to say local governments "should
have the authority to raise revenues from any local sources without being required to beg for
funds to pay for the services they need" (1966, 321).
There are nearly infinite taxing opportunities for a local government what may be
lacking is authority and in some cases home rule could be an asset for a municipality to gain
the authority. What primarily limits these opportunities is collectability (Mikesell 1994,
231). When searching for methods of raising additional revenues "local governments first
need to identify which revenue sources are underutilized and which are overutilized" (Hy,
39


Boland, Hopper, and Sims 1993, 220). Underutilized revenue sources may have an
additional, unmaximized revenue generating potential and an overutilized source may be
over-maximized resulting in loss of funds, especially if the funds are inelastic. Mikesell
summarizes this challenge by noting that a "tax must be collectible at a reasonable cost to
society...(and)...(i)n general, taxes and tax provisions should be designed to keep total
collection cost as low as possible" (Mikesell 1994, 231). Fischer and others often judge
property taxes as one of the worst taxes due to its influences, economic impacts, political
viability, and numerous exceptions and exclusions (Fisher 1996). One of the most attractive
and propagatious revenue sources is the municipal sales tax (Aronson and Schwartz 1996,
232; Aronson and Hilley 1986, 145) but Fisher outlines the drawbacks of the sales tax
(Fisher 1999).
Individual municipal taxation may not be as effective or efficient as would be a
consolidated, centralized, state controlled revenue program. Those "wishing local
independence of government will also object that the state levy and administration of taxes
places more authority in the hands of the state and weakens the local units. The price of
local 'home rule' in revenue raising, however, may be a patchwork of poorly enforced,
inequitable, and inconvenient local taxes which, at most, can only alleviate local revenue
problems" (Tax Institute 1955, 212). However,
it is not a question of how many governments there are (in determining the
components of a local revenue system), but a question of the powers of taxation
possessed by the local government or governments. How free are the regional
governments to select their own taxation devices? Do they have 'home rule' in tax
matters or has the state appropriated to itself the lucrative taxes and at the same time
circumscribed or restricted the taxing powers of its municipalities?" (Tax Institute
1955,247).
Inter-Local Relations In The Urban Environment
The urban government structure continued to face new challenges subsequent to the
period described above. Suburban growth and home rule's isolating and independent
40


tendencies created a stronger for municipalities to develop stronger and more efficient
inter-local relations.
The internal and external systems of local government relations are characterized by a
chaos of structure, function, and political process where the sharing of functions is in no neat
order (see: Grodzins 1966; Stilwell 1996). The report of the Committee for Economic
Development and other recent writings assuming "the condition of the local governments is
not well enough to be let alone strike a new note in their emphasis upon the strategy of
bringing about change....Instead of urging the grant of greater home rule powers to local
governments as a good in itself, the CED suggests that this can appropriately come only after
the local governments are drastically redesigned so that they are worthy vessels for the
receipt of added powers" (Fesler 1967, 571).
Some reformers exhort a continued increase of state prominence through a
consolidation of general local governments and an increase in local governance at the state
level (Campbell and Birkhead 1976, 11; Marando 1976(b), 24). Schaller argued the role of
the centralized authority will be filled by existing state governments rather than newly
created regional authorities (Schaller 1961, 415) and acceptance by the state governments of
a larger responsibility for the administration and financing of these municipal and
intermunicipal functions will spell the end for home rule. Others describe state-local
relations as constantly evolving incrementally and thereby continually reforming without the
need for draconian structural changes (Zimmerman 1976, 54).
Home rule may have its greatest effect in the inter-local arena. Some have argued
that local governments in the suburbs carry out home rule with the express purpose of
obtaining protection for municipal boundaries and thwarting development of the larger
metropolitan area (Tollenaar 1961). The American local government system has been
criticized for having too many overlapping and duplicate governing bodies (Alderfer 1956,
10). Intergovernmental relations and interlocal cooperation is not a substitute for
simplification and rationalization of the complex governmental structure in the United States
but it can resolve some of the problems arising from the inevitable fact of many governments
41


impinging upon one another as neighbors or operating in the same territory (Bebout 1966,
18).
Christensen found it likely "that governmental agencies that depend on shared
resources collaborate...(whereas)...governmental agencies that depend on external resources
compete (Christensen 1999, 76). Scholars have sought methods to diffuse the inter-local
competition. Crowley advocates expanding county home rule authority to improve the
suburbs that extend beyond the boundaries of the central city (Crowley 1950, 178). Luther
Gulick, advocated that the increasing urbanization of counties has created a need to
reexamine them as benefiting from home rule (Gulick 1958, 114). Much of the blame for the
failure of the regional planning can be attributed to the isolationist aspect of home rule
(Schaller 1961, 411). This is so since the home rule concept requires the contributions of
each municipality must be made voluntarily thus effective regional planning and complete
home rule are incompatible goals (Schaller 1961, 411).
Others advocate expanding inter-local governance with increased cooperative service
delivery (Christensen 1999). Area governments (either home rule governments operating
cooperatively or through a regional organization) is a key dimension of the
intergovernmental system (Christensen 1999, 55). They have "become an elaborate and
specialized system of governments" (Christensen 1999, 55).
Financial and inter-local relations questions remain. Later this study will seek
answers to the question: Does home rule make a financial difference for Colorado
municipalities. Also, the case study analysis will provide information about inter-local
relations in Colorado.
This study examined the line between state and local issues as well as financial, and
inter-local concerns. Colman summarizes "though its rhetoric continues to be heard in
bargaining between mayors and governors, and in tax and regional controversies..., city
home rule has lost most of its functional significance" (Colman 1975, 23).
The next section will expand on earlier discussions of the theoretical bases for home
rule. The final section of the literature review will briefly survey key components of home
42


rule across the United States ending with a detailed description of municipal home rule in
Colorado.
Home Rule's Theoretical Bases:
Democratic Theory And Competency Theory
Home rule has footings in two theories: democratic theory and competency theory.
Some, as described above, argue competency theory competes with democratic theory.
Public administration has a long history of a dualistic normative theoretical approach of state
versus stateless paradigms (see, for example: Stillman 1991, 136) and home rule has been at
the center of "the tension between the cardinal value of popular sovereignty and the
pragmatic necessity of ensuring legitimacy" (Krane, Smith and Rigos undated, 7).
Home rule grew from the democratic theory principles of local control, civic
involvement and a strong local governance. Competency theory compliments democratic
theory in the home rule setting; home rule governments seek home rule empowerment to
become more competent with broader authority to meet municipal challenges better.
As described above home rule has a strong legal basis; legislators and jurists have
constructed, modified, and defined home rule and its powers and authorities (see also: Clark
1985). The "constitutions are normally explained, in terms of the written law, by lawyers
who are interested in such things as 'sovereignty,' 'delegated powers,' 'reserved powers,' and
'jurisdictions'" (Gulick 1966, 114). Legally, it is evident both the American states and city
governments have a measure of autonomy (Gelfand 1980). The legal landscape has evolved
affecting legal views and interpretations of home rule; "developments in history, political
and philosophical theory, policy analysis, and case law are beginning to achieve a weight and
density such that a paradigm shift is in the making. That shift is detectable in the work of
many academics and judges. Its orientation is toward the rediscovery of community, of civic
participation, of democratic accountability, of bold and ceaseless experimentation, and of
ferment within the polity" (Libonati 1987, 646).
43


There is more to home rule than a legal creation as Libonati stated. State and "local
relations in the United States provides one of the most fascinating arenas for studying the
interplay between law and politics" (Wright 1982, 356 and 358) and home rule is one of the
areas at the heart of this interplay. The strict legalistic methods demonstrated by the
Dillon-based models fail to address a central issue in intergovernmental relations: Who
should govern? (Wright 1993, 76). The normative debate surrounding which level of
government should govern the urbanizing areas is the topic of this section.
As urbanization began in the post-war years to create new challenges for local
government scholars, students and academicians began debating the issue of how best to
serve the burgeoning municipal populations and the continued viability of municipal home
rule as a method for meeting new and increasing urban challenges. As noted above
urbanization facilitated the blurring of the lines between municipal and statewide service
levels.
Home rule's history, as we have seen, has roots in democratic theory. The challenges
of urbanization led to the rise of competency theory. These theories are not mutually
exclusive. In fact, as described below, we will see how home rule may be the ideal setting
for complimenting both democratic and competency theories.
Democratic Theory
Democratic theory suggests the government most accountable and familiar with the
governed and their issues and challenges should be the level of government to provide
service. In other words, "democratic doctrine says government closest to the people governs
best" (Keith 1951,9).
Jefferson considered the best guarantee of liberty and the most effective protection
against governmental absolutism and corruption to be vigorous local governments, entrusted
with all the duties they could possibly handle (Gulick 1966, 33). Jefferson also believed
local governments would enhance efficient government operations (Gulick 1966, 33) but
warned cities can become breeding grounds for social decay (Matthews 1984, 109 and 40).
44


He said "sovereignty resides ultimately in the individual, that his personal supervision and
direction of government constitute the height of democratic virtue, that the smaller the
locality the more likely it is to be democratic" (Syed 1966, 4). Jefferson has an unwavering
faith in democracy and the ability of humanity to govern itself (Matthews 1984, 119). "The
traditional Jeffersonian theory asserts for localities a right to self-government as an
expression of the sovereignty of the individual, derived from the doctrine of the sovereignty
of the people, the individual's presumed condition in the state of nature, and a theory of
natural rights" (Syed 1966, 5).
The exigent difference between local government policymaking and that of the
federal and state governments is local government policymaking takes place closer to the
people-closer to the voting constituency (Heiss 1976, 76). Indeed "our government was
founded on the principle that the people closest to the problem know best how to solve it"
(Keith 1951, 130). Americans "shy away from 'distant' and 'central' government and believe
in the maximum possible local self-government....(W)e think it better to let the local people
take the responsibility, pay the added taxes, and run their own show" (Gulick 1966, 44).
Gulick states such a democratic theory "of local government is reasonably clear and
logical and has been highly successful in practice for almost 200 years, in spite of vast
territorial, social, and economic changes" (Gulick 1966, 45). Municipal government is
important "in providing the opportunity within a democratic framework for those most
interested in government to participate in its decisions" (Vaubel 1991, 845). Local self
government is that system of government under which the greatest number of minds,
knowing the most, and having the fullest opportunities of knowing it, about the special
matter in hand, and having the greatest interest in its well working, have the management of
it or control over it (Moore 1949, 17-18).
Keith takes Moore's statement a step further in claiming "local self-government is the
basis of a democratic state; it is essential to a true concept of democracy. The local
governments are the most accessible to the citizenry and are, therefore, the training grounds
on which the populace can develop practical political capacity" (Keith 1951, 129); "(f)or the
'cradle of liberty,' where citizens learn the principles and practice of democracy is, in
45


American towns and cities, not in the states or the nation" (Syed 1966, 55). Municipal
governments need to provide the opportunity within a democratic framework for those most
interested in government to participate in its decisions, (Vaubel 1990, 813). Deming, an
early proponent of home rule believed "genuine local self-government is the ultimate
foundation upon which the entire super-structure of our political institutions must rest"
(Deming 1909, 184).
The citizenry have a stronger desire to be involved in local issues where they perceive
it is palpable to make a stronger contribution. Voters fear change and impacts on their local
community more than impacts on the "wider and less personal 'metropolitan area'" even if
such changes and impacts enhance good government (Gulick 1966, 100). Heiss believes
"urban policymakers, compared to federal and state policymakers, make decisions in a more
highly politicized environment: decisions tend to take place more often while the
policymakers are in direct contact with their publics" (Heiss 1976, 81). However, "local
policymakers reside in an urban environment which does not encourage innovation and
creativity" (Heiss 1976, 81). Such realities beg the question: do metropolitan residents want
a broader community and a broader local government (Gulick 1966, 100-101).
Home Rule And Democracy. Home rule is part of a paradigm shift toward a
rediscovery of community, civic participation, and democratic accountability (Libonati 1987,
646). Home rule strengthens the body politic (Alderfer 1956). ACIR was "convinced that
the American federal system in general, and the initiative and self-reliance of local
government in particular, would be greatly strengthened by loosening many of the existing
bonds upon local government" (ACIR 1962, 63). Voters can succeed in local
self-government only when they have the opportunity to control directly and be responsible
for the important affairs of their local units (Anderson and Weidner 1950). There are a
number of writings that review home rule in the community government vein. These include
a review of community corporations and other forms of decentralization (Hutcheson, Jr. and
Seggert 1991) and the city as a democratic institution (Report of the Los Angeles City
Charter Commission 1969).
46


Home rule facilitates a "responsible city" approach (Washnis 1971). It offers
community control and decentralization of city administration (Hallman 1971) and augments
neighborhood government (Altshuler 1971). A respondent in an ACIR survey suggested
home rule is an important instrument of decentralization and thereby of meeting the needs of
the constituency most democratically. To them, home rule assumes "governmental problems
should be settled at the lowest possible level of government closest to the people, and that
the undue concentration of powers in higher levels of government should be curtailed"
(ACIR 1981,28).
Competency Theory
A primary argument of competency theorists is the government best able to meet
challenges should be the level of government to do so the level of government most
competent at meeting service challenges should become the government to provide such
services. The right of any level of government to exert its influence rests upon whether that
government is effectively responding to a problem or challenge (Florestano and Marando
1981, 51) not, as legal scholars would argue, in their rights and authorities. Theories of
federalism that posit the rights and authorities of the various governments are just that:
theories. Often the government that acts to resolve problems takes a large step toward
creating its own authority (Florestano and Marando 1981, 51).
Academicians adduce Luther Gulick as a principal proponent of competency theory
(Florestano and Marando 1981, 51-52). The theory argues "no governmental jurisdiction has
a right to authority and power, that power has its own laws and that one of them is that it
'abhors a vacuum'" (Florestano and Marando 1981, 51). Political inaction at the various
levels of government leads to takeovers by other levels of government; "often the
government that acts to resolve problems takes a large step toward creating its own
authority" (Florestano and Marando 1981, 51).
The basis of competency theory is "an improved theory of management" facilitating
integration whereas one government is able to function more effectively than many smaller
47


governments, one government can control and manage better than many smaller
governments, larger governments are better coordinated, thereby being able to better plan
facilitate decision making (Gulick 1966, 80-82). Syed suggests competence theory takes
"the discussion of intergovernmental relations out of a more traditional framework of
constitutional rights and into a framework of performance and accomplishment" (Florestano
and Marando 1981, 52). Syed suggests a benefit to eliminating sovereignty from the
intergovernmental relations philosophical bases (Syed 1966, 7).
The basic idea that a unit of government acquires certain inalienable and irrevocable
rights as a result of its creation has complicated the plenary area of public administration.
Too often the perpetuation of a political subdivision's existence completely overshadows all
other questions including the fundamental one of service to its public (Schaller 1961, 408).
Graves notes a challenge to state-local (as well as federal-state) relations is "the inability
and/or unwillingness of governmental units to assume responsibility which rightfully belongs
to them. Just as the States have at time lost powers to the Federal government through sheer
ineptitude and inertia, so oftentimes have the local units lost to the States. Prompt, vigorous
action by governmental units at each level, based upon intelligent analysis of the problems at
hand, would go a long way toward solving many of our present inteijurisdictional conflicts"
(Graves 1964, 705).
The incompetence of government action occurs at all levels of government. For
example, "the states have not exercised their 'rightful role in the federal system' because of
gross deficiencies in the base, organization, and procedures of the state govemment....(S)ince
these deficiencies are remediable by state action, the states themselves are squarely
responsible for their failures to maintain co-equal status in the practice of federalism" (R.
Martin 1965, 46). The states have three "overriding deficiencies. The first is
orientationmost states are governed in accordance with the rural traditions of an earlier day.
The second is timelinessthe governments of most states are anachronistic; they lack
relevance to the urgencies of the modem world. The third is leadershipstate leaders are by
confession cautious and tradition-bound, which ill equips them for the tasks of modem
government" (R. Martin in Anderson, Newland, and Stillman 1983, 191). Martin "went a
48


long way toward dismissing the states as a positive force for improving urban areas" (R.
Martin in Anderson, Newland, and Stillman 1983, 192) and concluded as the central
conviction of his study that "states have not been able or willing to assume their share of
federal responsibilities, particularly during the last three decades, and that the national
government has been compelled to develop active relations with local governments in order
to make the American system operationally effective" (R. Martin 1965, 47).
Local government weaknesses "may have provided additional pressure for state
centralization" (Nice 1987, 147). For example, "(c)ounty governments, with significant
exceptions, have lagged behind higher levels of government in developing expert personnel,
administrative coherence, and a size sufficient to permit economical, competent
performance" (Grant and Nixon 1982, 343, 348).
Home Rule And Competency. Home rule governments are a prime example used by
competency theorists to demonstrate their case. Gulick claims incompetent home rule
municipalities have already lost to other governments much of the content of their home rule
(Florestano and Marando 1981, 52). Fordham similarly concluded "...home rule (is) out of
harmony with modem ideas about public administration, which stress flexibility and
adaptability in governmental arrangements at the expense of fixed geographical
patterns..."(Fordham 1949, 77). Schaller held home rule is an unworkable conceptthere
must be centralized authority competent to solve such problems (Schaller 1961, 414). Lee
complained home rule, which is essentially a system of divided political power, cannot be
sustained unless all centers of power in the system are strong, vigorous, and viable (Lee
1962, 488).
Urbanization led to home rule's downfall according to Syed and Gulick. Syed says
"(w)ith the emergence of the metropolitan problem, reformers have urged municipal
integration and consolidation, both of which have been slow in materializing" (Syed 1966,
3). Gulick states Americans "relied on 'home rule' when we should have known that the
general system of local government and the determination of constituency limitations are not
a local function but a state responsibility" (Gulick 1966, 125). He says "local incompetence
49


may lead to the assumption by the states of many activities which otherwise might have been
assigned to the metropolitan areas" (Gulick 1966, 102). The lack of local government
competence includes technological areas such as crime laboratories and financing modem
transportation networks (Nice 1987, 148). The line between state and municipal affairs
blurred with urbanization and "home rule has hindered the solution of various metropolitan
problems" (Buechner 1967, 141).
Defining functions of government and ascribing them to any one level of government
is difficult; "when it comes to certain specialized activities requiring state-wide action...the
localities are helpless and the state normally steps in" (Gulick 1947, 85). Nor, as Gulick
continues, is it possible under modem conditions to define any major function of government
as inherently in the local, state, or federal sphere unless we are to develop a unitary system
and designate all functions to the national government. There exists new types of political
and managerial competence to help meet city hall challenges (Gulick 1966, 101).
Syeds primary concern with home rule is that a large, urbanized municipality has
many different challenges and concerns than do small municipalities, yet their home rule
powers and authorities are the same (Syed 1966). He contends home rule proponents fail the
citizenry by advocating home rule for all municipalities regardless of "size, competence, and
interrelationships with other incorporated places" (Syed 1966, 108). Syed contrasted the
Jeffersonian model with the Madisonian perspective: "The Jeffersonian ideal of grass roots
democracy stands in direct contrast to the Madisonian concept of extensive republicanism.
To Jefferson, republicanism became purer as it came closer to the people. To Madison, it
became purer as it was farther removed from the people" (Syed 1966, 127 citing Huntington
1959). Syed suggests rejecting Jefferson not because of Madison but because Jefferson is in
the way of progress in improving efficiency and effectiveness in local government (Syed
1966, 124). He concludes "local government can not take a large view even when the issues
themselves are large. It is therefore wrong to encourage local action on matters which have
more than a local significance" (Syed 1966, 130).
Municipalities are reproachable for facing reduced home rule powers "because most
of the obvious difficulties seem to arise from the inability of the local governments to look
50


ahead and to perform their traditional activities under the new conditions they now face"
(Gulick 1966, 128). Gulick concludes the new metropolitan environment requires all levels
of American government to work with the growing metropolitan problems (Gulick 1966,
129).
The competency argument "does not reject outright the doctrine of local autonomy. It
is conceded that large competent municipalities may usefully exercise a measure of
autonomy" (Syed 1966, 143-144). Most competency theorists cohere with Gulick on the
need to redefine governmental activities to maximize governance. A state should perform in
those areas where they can do better than a city (Desmond 1955, 300). One "contemporary
challenge to the states is not merely to liberate their subdivisions by permissive enabling
legislation that will broaden the discretionary powers of localities to cope with their
problems (but)...to devise ways of bringing state leadership, technical assistance, financial
and other resources more effectively to bear in joint approaches and cooperative solutions to
difficulties that are beyond unaided municipal competence" (Mansfield 1967, 181). Syed
argues against "creating and retaining separate, autonomous local government...(which
is)...in defiance of the compelling modem values of large-scale organization, efficiency,
economy, rationalization" (Syed 1966, 49).
Other reformers, while understanding fragmented urban governments need to
streamline, believe local governments can work together to increase competence without
having the state increase its role in local issues. These "reform theorists advocate a
politically integrated system of metropolitan service delivery as the most effective
arrangement for achieving government efficiency and regional equity goals that are the
hallmark of reform. To reformers, fragmented metropolitan political structures lead to
chaotic and inefficient service provision and perpetuate fiscal disparities and inequities
caused by intrametropolitan mismatch between service needs and resources" (Foster 1996,
285).
Florestano and Marando still see opportunities for home rule municipalities to govern
competently. They view competency theory as not rejecting outright the doctrine of home
rule because large competent municipalities may usefully exercise a measure of autonomy
51


(Florestano and Marando 1981, 52). An example of governmental rejuvenation may be the
states; "not long ago it was even fashionable to question whether the states were necessary at
all or whether they would survive as part of the U.S. system" (Anderson, Newland, Stillman
1983,190). They also noted the remarkable modernization of state governments such as new
state constitutions, changes in governors' terms, executive branch reorganizations and the
development of powerful revenue streams allowing them to become a dominant fiscal
partner in state-local relations as contributing to the rebirth of the states in the IGR arena
(Anderson, Newland, Stillman 1983, 191).
However, "unless the concept of home rule is reformulated to meet modem
requirements, there is great danger that legitimate local self-government will be sharply
reduced because the present definition of home rule includes responsibilities which can no
longer be the subject of local control" (Gulick 1966, 137). Laconically, advocates of
competency theory advocate a reexamination of governmental functions and delineating
governmental functions to enable the "best" government for the job.
Home Rule As The Compliment Of These Two Theories
The competency versus democratic theoretical debate is at its essence an
intergovernmental relations discussion between the traditional framework of rights (natural,
moral and constitutional) and that of performance and accomplishment (Syed 1966, 143).
One views the lowest level of government as the best as it is closest to the people and the
other views the highest level of government as the best for some economies of scale
(Christensen 1999, 27). These two frameworks are not mutually exclusive; in the home rule
setting, with an increased emphasis on intergovernmental cooperation and coordination these
two frameworks are complimentary.
Competency theorists complain the blurring of state versus local functions has
obfuscated home rule authorities. Democratic theorists agree "the impracticability of
dividing powers has been the major stumbling block for home rule" (Keith 1951, 125).
Indeed, "any attempt to separate, to define, and to implement exclusive areas of
52


governmental responsibility for local units, on the one hand, and the states...on the other
would inevitably result in the elimination of virtually all local units" (Grodzins 1966,
324-325); however, the city is a "natural and organic unit with interests of its own" while the
state is an "arbitrary" organization (J. A. Smith 1930) and it is only at the lowest level of
government that every citizen has the opportunity to participate actively and directly (ACIR
1961,201).
A second complaint of competency theorists is that modem management with its
focus on efficiency and effectiveness has altered public administration. Reformers fail to
question the ethical status of democratic theory (Syed 1966, 3); for example, it is doubtful
"Jefferson would support the government of large cities" (Syed 1966, 43-44) "(t)he
environment in which the locality of Tocqueville's time exercised its independence has since
gone into history" (Syed 1966, 48). But democratic theorists respond -- a continuing "tenet
of public administration is that all administration should be carried on at the level of
government closest to the people consistent with the requirements of our modem, technical
civilization" (Keith 1951, 130). Similarly, Roscoe Martin finds the Jeffersonian ideal of an
agricultural republic with many small self-governing rural communities continues to be
widely respected (R. Martin 1957, 5). Finally, Ostrom, Tiebout, and Warren (1961)
concluded that the overlapping specialization of multiple governments is efficient.
Third, competency theorists charge democratic theory slows progress; "(o)ne
reason...for the slow progress of reform is the nation's attachment to the Jeffersonian ideal..."
(Syed 1966, 3). The deontologically minded democratic theorists place a greater value on
the process than on the results. Yet, competency theorists trivialize the process and "the
assertion that local government is the training school for democracy (observing) that small
government does not teach the citizen much beyond the village 'pump politics'" (Syed 1966,
130). Besides the value of the process, Christensen recently noted local governments work
cooperatively in a complex service delivery system instead of the self-sustaining,
Jeffersonian, traditional community of common concerns fashioning government to suit its
unique interests (Christensen 1999, 55).
53


Littlefield sees the split as theoretical versus practical. He says "(p)roponents of
home rule must be aware of the possible impacts of home rule theory upon the degree of
governmental flexibility which may be required in meeting area and regional urban
problems. On the other hand, metropolitan planners, adapting present day or future local
governments to the need of a metropolitan community, must be cognizant of the needs of
people for self-government" (Littlefield 1962, 4-5).
Home rule authorization "does not mean that cities or counties will opt to achieve this
status or, indeed, that if they do, they will exercise the authority that home rule gives them"
(Berman 1996, 35). Zimmerman completed a survey demonstrating infrequent use by local
government managers of the power to adopt and amend charters, limited utilization of each
of the four types of discretionary powers, very limited interest in furthering expansion, and
even strong opposition to the removal of constitutional local debt and tax limits (Anderson,
Newland, and Stillman 1983, 193-194). It may be the case that the competent municipalities
aspire to home rule status to expand their authority and improve their service.
Before taking the far reaching step of concluding home rule is faulty and should be
abandoned "it would be well to remind ourselves of the importance of local self-rule to our
system of government" (Keith 1951, 129). Box noted "American politics tend to go through
cycles or phases, and local government structures might as well" (Box 1993, 415). The
home rule experience in the United States has demonstrated the cyclical nature of municipal
government. Home rule governments may need simply to continue their evolutional nature
and take the step of cooperative service. For example, "local government will be improved if
there is less concern with jurisdictions and powers and more with cooperative arrangements
and ad hoc shifts of responsibility" (Florestano and Marando 1981, 53).
Local self-government "requires not only sound intergovernmental collaboration and
an involved body of citizens but also adequate governing powers, local jurisdictions of
adequate size, and the availability of ways to change localities...to meet new needs"
(Florestano and Marando 1981, 52). The "complexity of modem governance induces
division of tasks among governmental agencies in a range of ways, depending as much on
the politically formulated problem as on the technical nature of the task. Particular
54


intergovernmental arrangements tend to derive more from historical circumstance and
short-term political cross currents than from conscious design" (Christensen 1999, 31).
As Foster noted above, municipalities can work together to improve competence
rather than relying on super-municipal government to undertake the responsibility.
Florestano and Marando, although granting "there are sharp disagreements among local
people about what course of action should be followed" (Florestano and Marando 1981, 53),
agree with Foster and suggest there be a requirement placed upon "metropolitan areas to
reform their fragmented systems of local government" (Florestano and Marando 1981, 53).
In addition, "shifting functions would alleviate some of the problems of metropolitan areas
because it would equalize resources, redistribute tax burdens, and provide more coordination
of services" (Florestano and Marando 1981, 53). The editor of a vulgate government
periodical concluded "(t)he future lies not in centralized government but in networked
government with decision and action closer to the citizen" (McKenna 1997, 7).
Both democratic and competency theorists make strong points for their positions.
This study describes how there is an apparent compliment between these positions with
home rule. Do municipalities in Colorado compete or cooperate? Are they competent in
meeting their responsibilities and is home rule a facilitator? Are they responsive to their
citizens and do their citizens have opportunities to be involved in municipal governance?
The case study research seeks answers to these questions.
This study has examined the history, legality, and theoretical bases of municipal
home rule. Next it will look at municipal home rule in practice across the United States with
a deeper focus on Colorado as it is the setting for the research.
Home Rule Across The United States
Denoting the home rule provisions in each state or articulating clearly the degree to
which municipalities practice these provisions is not possible; actual practice of home rule
depends heavily on the historical power relationship localities have with their states (Coe
55


1982, 116). In most states, home rule or the right of self-government derives from either
constitutional provision or legislative delegation rather than being an inherent right (Nolan
1993, 505). The ACIR "discloses no clear pattern for classifying states on the basis of the
amount of discretion their municipalities enjoy. Yet the conclusion of the study is that,
although local units of government possess more discretion than they use, in general they do
fall short of possessing broad structural, functional and financing powers, particularly the
last" (Vaubel 1991, 852).
The Codicil includes a brief highlight of home rule provisions in the forty-nine states
(save Colorado which will be reviewed in detail in the following section). This section
coupled with the Codicil survey will provide an overview of home rule in the United States,
a context for Colorado's provisions, and a compilation of literature references to facilitate
further research. For a more detailed review of home rule across the states see Krane, Rigos,
and Hill, Home Rule in America: A Handbook for the Fifty States (in press). The home rule
states all vary slightly in their provisions; a review of the home rule case law developed in
the states (American Bar Association Committee on Municipal Home Rule 1969).
There is home rule variety between the states and within regions (Zimmerman 1967).
The images of municipality's "in the individual states varies widely and reflects the overall
governmental climate in each state, the quality of state government versus that of local
governments, the extent of urbanization, and other factors" (Anderson, Newland, and
Stillman 1983, 182). ACIR (1981) rated the states by authorized level of municipal
discretion and found "the 10 states rated at the topOregon, Maine, North Carolina,
Connecticut, Alaska, Maryland, Pennsylvania, Virginia, Delaware, and Louisiana-give their
local governments relatively great discretion in the management of their own affairs;
whereas the 10 rated at the bottomNebraska, Colorado, Massachusetts, Iowa, Mississippi,
Nevada, South Dakota, New Mexico, West Virginia, and Idaho-tend to maintain the greatest
degree of control over their local units (in Anderson, Newland, and Stillman 1983, 192)."
56


Home Rule By Region.
Regionally, "cities in the South were granted home rule authority in fewer instances
than were cities in the (West, North Central or Northeast); only ten of the sixteen southern
states were found to have given their cities home rule powers, whereas twelve of the thirteen
western states, eleven of the twelve north central states, and eight of the nine northeastern
states were found to have done this" (Hill 1978, 4). Hill also found "the degree of functional
home rule authority granted to cities was greater in the South than in the other regions; while
states in the West, the North Central region, and the Northeast were more numerous in
granting municipal home rule altogether, these states were generally more conservative than
the South in the scope of the power granted" (Hill 1978, 4). Hill concluded "almost all
cities...granted home rule authority have been given the power to determine their own form
of government" (Hill 1978, 4).
There have been a number of studies on home rule in New England. Berman found
"New England states...have a relatively strong tradition for favoring local autonomy. There
has been an equally strong tradition in southern states in favor of state centralization"
(Berman 1996, 52). However, home rule has developed slowly in New England
(Connecticut Public Expenditure Council 1978; Gere and Curran 1968; Haag 1970; Coduri
1981; Zimmerman 1976) and where home rule has developed in New England, it has taken
the legislative form of home rule (Curran and O'Hare 1965).
This summary of home rule in the states, coupled with the survey in the Appendix,
provides a context for the evolution of the home rule movement. Noteworthy is the fact that
municipally focused writings proliferated in the 1950s. This was as urbanization occurred
creating modem municipal development. Now this study will delve further into the nuances
of municipal home rule law and policy in the State of Colorado.
57


Municipal Home Rule in Colorado
The Evolution Of The Legal Structure
The original constitution, adopted in 1876, still governs Colorado (Walton 1984). In
the nineteenth century, the Colorado Supreme Court accepted Judge Dillon's rule of
municipalities being administrative arms of the state (Phillips v. City of Denver 1893).
Colorado courts applied Dillon's Rule by holding the "legislature's supremacy encompasses
all activities, governmental and proprietary; no action of a municipality is valid unless some
relatively specific grant of authority can be found in a statutory or constitutional provision"
(Klemme 1964, 323). The state legislature began intruding on Denver's local governance in
1889 when it created the Denver Board of Public Works and a Fire and Police Board to have
members appointed by the governor to operate some of the city's governmental functions
(Catherwood 1997, 20).
Home Rule For Denver. The popular mood surrounding the legislative treatment of
Denver became one of dissatisfaction in the early 1900s (Colorado Municipal League 1991,
2). During that period, the legislature had the authority and power to "create a municipal
corporation by enacting a special law granting a corporate charter. By the terms of the grant,
the legislature could control the form of organization and scope of powers of any particular
city" (Klemme 1964, 323). As interest grew in removing state control from the city
government the Legislature prepared a constitutional amendment to, among other things,
"empower the voters of Denver and other cities to enact and amend home rule charters"
(Catherwood 1997, 20). The Amendment was placed on the November 1902 ballot with
strong opposition from the monopoly utilities but prevailed by a vote of 59,780 to 25,767
(Catherwood 1997, 20).
Colorado has a strong history of home rule (Klemme 1964 325; Broadwell 1996, 18;
Stilwell March 21, 1996). Colorado became a home rule state in the early twentieth century
and "(i)n light of the fact that Colorado did not become a state until 1876, the Colorado
home rule doctrine is a relatively old one" (McCullough 1989, 443). Article XX of the
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Colorado Constitution adopted in 1902 provides for municipal home rule (Klemme 1964,
321; King 1911, 215; Littlefield 1962, 13; Sloan 1976, 257). The Amendment, like
Missouri's, was designed to give a segment of power and authority to the state's
municipalities (Keith 1951, 26) and, in particular, Denver (Stilwell and Gage, in press).
Colorado did "what was for many years considered to be progressive action by making
Denver a city and county, which could function basically as a home rule city, (and) also
became a leader in the home rule movement (with)...(c)onstitutional, self executing home
rule for all municipalities in the state with populations of 2,000 and above" (Riethmayer
1971, 36).
A far reaching amendment was adopted in 1912 (Griffith 1974a, 125) establishing
home rule charters as "organic law" that extends "to all local and municipal matters" and
"supersede within...said city or town any law of the state in conflict therewith" (Article XX,
Section 6). Thus a drive in the municipal home rule movement in Colorado was "for the
purpose of creating the consolidated City and County of Denver and establishing that city's
independence from state legislative control of its internal affairs," held the court in People
ex. re Elder v. Sours (as cited in Klemme 1964).
Colorado's home rule relieved municipalities "from their dependence on legislative
action for their form of organization and powers from the resultant interference in municipal
affairs such dependence made possible" (Klemme 1964, 324). Mott, in 1949, noted the
benefits of constitutions like Colorado's that outlines broadly the charter-making procedures
(Mott 1949, 50). The Colorado constitution contains brief self-executing provisions (Art.
XX, Sec. 5), that are more in accordance with the spirit of home rule since it permits a city to
work out its own procedure through the charter commission than to prescribe it by
constitutional or legislative fiat (Mott 1949). But the statements of intent such as those
found in the Colorado constitution turned out to be vague and difficult to apply as the state
evolved (Keith 1951, 127).
Colorado Home Rule Evolves. As the state urbanized following the Second World
War the home rule amendment became inadequate in a number of areas (Colorado
59


Governor's Local Affairs Study Commission 1965, 101-106). McBride reviewed Colorado's
home rule in 1957 (including municipal classifications) and home rule was a topic of study
in the 1960s (Lacy, Halloway, Sellens 1965). In 1964 Buechner found the evolution to home
rule for Colorado municipalities couples with the rise in the council-manager for of
government and he provided an examination of the home rule doctrine as written into
Colorado law (Buechner 1964; Buechner 1965).
In 1965 Governor Love's Metropolitan Commission found four problems with
Colorado's home rule legislation. First was the minimum population requirement.
Colorado's self-executing home rule doctrine only permitted incorporated cities or towns
over 2,000 population to become home rule (Buechner 1964, 8). Second the Commission
found problems with the election procedures. Article XX required three separate elections
for home rule and the Commission found this requirement burdensome and expensive
(Article XX). Third, the Commission found substantive problems with Article XX. One
problem was the inherent challenge of separating statewide and local concerns. The
Commission found the obfuscated line between the statewide and local concerns led to
degraded state-local relations with a "changing gray area" of matters of municipal concern as
the courts constantly redefined and refined the home rule doctrine; the Colorado statewide
versus local issue is more thoroughly outlined below. The Commission also found
substantive concerns with the rigidity of Colorado's home rule constitutional provisions.
Home Rule Expands. Two acts of legislation in the early 1970s addressed most of
the Commission's concerns. In 1970 legislation deleted the minimum population provision
(McCullough 1989, 443; Catherwood 1997, 20). In 1971, the Colorado General Assembly
passed the Municipal Home Rule Act granting Colorado constitutional home rule (Colorado
Revised Statutes 31-2-201; see Colorado Constitution, Art. XX; see Colorado Municipal
League 1991). The Municipal Home Rule Act further strengthened or at least clarified home
rule authority; among other things the Act specifies clear procedures in creating a home rule
charter and eliminated the limitation preventing towns under two-thousand population from
adopting home rule charters (Sloan 1976, 260). With the Act, the General Assembly
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established rules and guidelines for all municipalities to implement Article XX. The various
provisions in Article XX for establishing home rule were to continue to apply until
superseded by statute. Adoption of the Municipal Home Rule Act superseded the procedural
requirements for adopting and amending home rule charters. 1972 legislation granted the
opportunity for home rule to the state's counties (Colorado Constitution, Article XIV,
Section 16; see also, David 1992). In 1976, Sloan published an overall summary of
Colorado home rule including the extent and powers of municipal and county home rule
(Sloan 1976).
Today, the home rule doctrine is one of the most well established and stable bodies of
case law in Colorado, having been the subject of more than 200 appellate decisions
(McCullough 1989, 443). The evolution from Dillon's Rule to home rule results in Colorado
having moved away from state centralization (Wright 1982, 375). There are 269
municipalities in Colorado, 76 of which are home rule (Colorado Municipal League 1997(a),
123) and other municipalities contemplating a move to home rule (Hickman, August 4,
1998). However, the legislature's focus on the municipalities ebbs and flows and the
strength of Colorado's home rule is not unchallenged as demonstrated in the 1999 meeting of
the Colorado General Assembly. In February "local governments received a triple
blow...limit(ing) the ability of a city or town to regulate land use and gun possession"
(Johnston, February 13, 1999) motivating Sam Mamet, assistant executive director of the
Colorado Municipal League, to declare "(l)ocal control anymore means control of the locals"
(as quoted in Johnston, February 13, 1999). The remainder of the session entailed "greater
than anticipated attacks against home rule and local control" culminating in the defeat of a
resolution supporting home rule and local control (CML 1999b, 1) and leading Sam Mamet
to declare to state lawmakers "(the cities) don't like state intrusion into local decision-making
any more than the state likes the federal government intruding into its decision making" (as
quoted in Sanko, September 15, 1999).
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Colorado Home Rule In Context --
National And In-State Comparisons
The home rule authorities in some states offer little more individual control than do
the state statutes (Adrian and Press 1977, 140). Other states have home rule authorities that
the state legislature and court decisions have greatly curtailed (Stilwell and Gage, in press).
A few states, including Colorado, provide substantive home rule authorities to the
municipalities (Klemme 1964, 324).
Colorado Municipal Home Rule Compared To That Of Other States. The Colorado
home rule authorities are in some areas broader than those of home rule municipalities in
other states (Stilwell, March 21, 1996). For example, the Colorado courts have supported
extraterritorial actions by home rule cities and towns. The most influential, in the scope of
local government survival and growth, concerned water. A 1975 case held that Article XX
specifically defined selling water by a municipality both within and without its territorial
boundaries to be a proper exercise of its powers (Colorado Open Space Council, Inc. v. City
and County of Denver 1975). Other holdings noteworthy regarding extraterritorial home rule
jurisdiction are that a city may condemn private property outside its boundaries for its local
public use (Fishel v. City and County of Denver 1940), and that a home rule jurisdiction not
be required to obtain the consent of an incorporated town before acquiring title and
possessions of rights-of-way through such town by condemnation proceedings (Town of
Glendale v. City and County of Denver 1958).
Colorado Municipal Home Rule Compared To Colorado County Home Rule.
Colorado law allows both municipalities and counties to adopt home rule charters. A
comparison of municipal and county home rule in Colorado reveals the breadth of the term
"home rule" and suggests Colorado's home rule municipalities have the opportunity to
possess significant authority. Article XIV, Section 16 of the Colorado constitution permits a
county to restructure under a home rule charter. Two of Colorado's sixty-three counties have
adopted home rule charters.
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Pitkin County is one of the Colorado counties that has opted for a home rule charter.
Weld County is the second (David 1992, 14). Weld County maintained most of the
constitutional and statutory structural provisions. The major changes the home rule charter
promoted were in the areas of tax limitation and a restructuring of the administrative aspects
of the government.
In 1981, the Colorado General Assembly enacted the Colorado County Home Rule
Powers Act designed to expand the powers of home rule counties. The Act particularly
expanded the ordinance and finance powers of home rule counties (David 1992, 15).
County home rule is clearly not as prevalent in Colorado as is municipal home rule.
County and city home rule differ legally which may be a factor in a lower ratio of counties
adopting home rule than do municipalities.
State law only provides counties with structural home rule, not functional home rule.
Structural "home rule allows the county to change the structure of county government, but
does not allow counties any more significant authority than statutory counties presently
have" (Brown 1992, 22). Colorado law allows municipalities to adopt both structural and
functional home rule. Functional home rule enables the municipality to modify its functions.
Colorado Municipal Home Rule Compared To Statutory Rule. Colorado's municipal
home rule is also more substantive when compared to the state's non-home rule
municipalities and the statutory constraints imposed upon them (ACIR 1981, 7). Colorado's
home rule municipalities have a large amount of independence from the state statutes; as will
be reviewed in more depth in the following section, the courts have held that local charter
ordinances, affecting an item of local concern, conflicting with state law are supreme to the
state law. Denver successfully argued interference with a matter of local concern in Denver
Urban Renewal Authority v. Byrne (1980). Examples of differences in powers include local
collection of sales taxes, determining procedures for conducting business (i.e. by ordinance,
resolution, and number of readings), election procedures, some condemnation powers, fund
investment, land use powers, and control over acquisition and disposal of public property
(Bueche 1982, 4-5). Financially, non-home rule municipalities can only impose property
63


taxes, sales and use taxes, and business and occupation taxes (Griffiths 1980, 4). Even with
these differences a respondent in an ACIR study stated Colorado "(h)ome rule
municipalities...are conservative in exercising home rule powers and seem more comfortable
operating under statutory grants in many instances" (ACIR 1981, 30).
Statewide Versus Municipal Concerns In Colorado
As noted above the obfuscation of statewide verus municipal matters is the crux of
the home rule problem and determining local versus state concerns is in most cases
exceedingly difficult (Valente 1987, 103). Similarly, in Colorado determining the line
between local and statewide concerns is difficult (Klemme 1964, 329-346) Colorado courts
have vacillated over the years in separating the realms sometimes interpreting "local and
municipal" liberally and others so strictly as to allow the state to pass legislation overriding
home rule (Catherwood 1997, 20). Contemporarily, Colorado governments have followed
the policy of dividing governmental matters in three areas to define when to act. In matters
of purely local concern, ordinances adopted by home rule municipalities supersede
conflicting state statutes. In matters of mixed statewide and local concern, state statutes and
municipal ordinances may co-exist if they do not conflict. If conflicting, the courts will hold
the state statute supreme. In matters of purely statewide concern, state law totally preempts
municipal legislation (McCullough 1989, 443; Haddock 1990; Fricke 1996; Broadwell 1996,
14; Lamm and Zoellner 1981, 765; Klemme 1964 328; Sloan 1976, 258). Defining "what is
or is not a matter of 'local concern' is a never-ending source of conjecture and litigation"
(Broadwell 1996, 15).
In deciding local verus state concerns "the courts will cut right to the heart of the
matter the Legislature is purporting to preempt, and in so doing the court will analyze a
number of factors, such as: (1) the demonstrated need for statewide uniformity in regulation;
(2) the demonstrated impact of municipal regulation on people living outside the
municipality; (3) historical considerations of whether the matter has traditionally been
64


regulated at the state or municipal level; (4) the demonstrated need for the state to be
involved to resolve intergovernmental conflict at the local level; and (5) specifically
delineated home rule authority as set forth in Article XX of the Colorado Constitution itself'
(City and County of Denver v. Colorado 1990 as cited in Broadwell 1996, 20).
Article XX has been interpreted to mean that where a matter is of a local and
municipal concern, then the home rule city does not derive its powers over such matters from
the General Assembly but rather derives its powers from Article XX of the Constitution
(Stilwell, March 21, 1996). In matters of exclusively state-wide concern, state statutes would
supersede any conflicting local ordinances. Colorado's home rule is "self executing" leading
the "courts (to) hold that home rule cities have been constitutionally granted every power
possessed by the General Assembly as to local and municipal matters. The function of a
home rule charter is only to limit the otherwise plenary powers of home rule cities under
Article XX" (McCullough 1989, 443). In addition, the Colorado constitution enumerates
numerous local functions (Art. XX Sec. 6) which helps clarify the line between statewide
and local concerns in the enumerated areas. "One of the most compelling arguments in favor
of home rule is the flexibility it gives locally elected officials to regulate in matters of purely
local concern, free from interference by the state Legislature" (Broadwell 1996, 14-15).
However, the "ad hoc nature of the local concern versus statewide concern analysis
inherent in the home rule doctrine (has resulted in the doctrine being) in a state of constant
evolution" (McCullough 1989, 443). This study examines the home rule authorities granted
to Colorado municipalities in more detail below.
Colorado Home Rule Authority
The Colorado Supreme Court said home rule is "intended to reiterate unmistakably
the will of the people that the power of a municipal corporation should be as broad as
possible within the scope of a Republican form of government of the State" (City of Fort
Collins v. PUC 1921).
65


COLORADO HOME RULE AUTHORITIES
ADMINISTRATION ELECTIONS FINANCE TAXATION
Franchises Initiative Budgeting Excise
Capital Construction Election Code Revenue Bonds Sales and Use
Open Meetings Recall Debt Limitations Admissions
Open Records Election Procedure Purchasing Car Rental
Notice Requirement Election Dates Voter Approval Accommodations
Special Meetings Executive Sessions Ordinance Reading Ordinance Publication Liability Limitations Wards or Districts Referendum Assessments Occupation Service Charges Tax Limitations
LAND USE ENFORCEMENT PERSONNEL GOVT STRUCTURE
Zoning Municipal Courts Residency Requirements Number on Council
Condemnation Misdemeanor Theft Police training standards Filling Vacancies
Planning Judge term of office Special Counsel Traffic Enforcement Business Regulation Animal Control Retirement Termination Qualifications Form of Government
The powers of a chartered municipality are part of the constitutional powers granted to the
home rule city by the people (Pueblo Aircraft Service, Inc. v. City of Pueblo 1980). The
home rule charter is "another opportunity for a town to control its planning process....A
mature city might use it to tailor their service delivery because home rule allows you to work
with some organizational features. Growing cities...can use it more as an opportunity to
create a framework" (Stilwell quoted in Hickman, August 4,1998).
Local Concerns. One of the primary powers is local land use control (Broadwell
1996; Colorado Division of Local Government 1999; Fricke 1996 referencing Vista Village
v. City of Boulder and Boulder Builders v. City of Boulder). The Colorado courts have
repeatedly held "zoning is a matter of local concern; the authority to zone and regulate land
66


use within a home rule city or town derives from the municipality's own charter; and where
there is a conflict between a state statute and a home rule charter or ordinance on this
subject, the latter controls" (Broadwell 1996, 15). Home rule municipalities have broad
condemnation powers granted directly to them (Article XX, Section 1) which they can
exercise within or outside municipal boundaries so long as it is for an authorized purpose
(Griffiths 1980, 5) including condemnation of public property (City of Thornton v.
F.R.I.C.O. 1978).
The courts have established a number of areas to be of local concern for home rule
municipalities (McCullough 1989, 444). These include: municipal courts (People ex. rel.
McQuaid 1932; Hardamon v. Municipal Court 1972), zoning (Roosevelt v. City of
Englewood 1971; City of Colorado Springs v. Smartt 1980), capital improvement
construction (Davis v. City of Pueblo 1965; Four County Metropolitan Capital Improvement
District 1962; Berman v. Denver 1965), election and recall (Laverty v. Straub 1943;
International Brotherhood of Police Officers Local 127 v. Denver 1974; Bemzen v. City of
Boulder 1974), broad employee regulation (Griffiths 1980, 7) including municipal employee
residency requirements (City and County of Denver v. State of Colorado 1990), theft of
items under $300 (Haddock 1990, 2) and public right-of-way franchises (City of Greeley v.
Poudre Valley Rural Electric 1987; City of Montrose v. P.U.C. 1987).
Statewide Concerns. Similarly the courts have established a number of areas to be of
statewide concern (McCullough 1989, 444) including: liquor regulation (Colorado
Constitution, Article XXII), utility charges and rates {P.U.C. v. City of Durango', Denver v.
P.U.C.), felonies (City of Aurora v. Martin 1973), and certain other criminal acts {Gazotti v.
Denver 1960). Additionally there are restrictions posed upon home rule municipalities'
election, initiative, referendum, and recall procedures to insure reasonable exercise of home
rule powers (Griffiths 1980, 9). Courts consider restrictions on vested property rights and
publication requirements statewide concerns. These provisions have not been challenged in
court. When challenged the courts may not support them as statewide concerns (Haddock,
November 15, 1999).
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Courts have held various state laws focusing on local issues do not apply to home rule
municipalities (Stilwell, March 21, 1996). In 1996 the court held a statewide police training
standard does not apply to home rule municipalities (Fraternal Order of Police v. City and
County of Denver) as home rule municipalities have "the constitutional prerogative to
control the appointment and qualifications of its own officers pursuant to its own charter"
(CML 1997(b), 23). Three Colorado Supreme Court decisions exempted Colorado's home
rule municipalities from the open meetings and open records requirements (Associated
Students of the University of Colorado v. Board of Regents 1975; Gosliner v. Denver
Election Commission 1976; Uberoi v. University of Colorado 1984). Thus, "open
government at the local level in Colorado depends largely on the provisions in the home rule
charters of the major cities and towns in the state" (Archibald 1989).
The Colorado legislature expanded home rule powers by allowing the creation of
metropolitan capital improvement districts (The Council of State Governments 1962). A
1982 case brought broad grants of authority into question (Community Communications v.
City of Boulder 1982). The Advisory Commission on Intergovernmental Relations (1985)
widely reviewed this issue. The special district legislation in Colorado is a significant area
as metropolitan districts in the state have significant power and authority sometime
exceeding that of home rule municipalities including broader extraterritorial condemnation
authority and financing measures (Stilwell and Schmatz 1999).
Home rule authority has also been reduced over the years in two significant areas
annexation and finance (Catherwood 1997, 28). In 1974 Article XX, Section 1 was
approved stopping all annexations by Denver without approval by the county in which the
land exists. In 1992 voters approved Article X, Section 20 (The Taxpayer's Bill of Rights
TABOR) which restricted the finances of all Colorado governments, home rule or
otherwise.3
One important authority to review is home rule financial authority. The "ability of
local government to tax their own citizens ranks second in importance (behind legislating) to
complete autonomy ('home rule') as a means of solving metropolitan revenue problems" (Tax
TABOR is examined further below.
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Institute 1955, 250). The financial authority of Colorado home rule municipalities assessed
separately in the following section.
Financial Authority Of Colorado Home Rule Municipalities
Local government finance is much more of a local concern in Colorado than in other
states because of the explicitness of the home rule provisions in the constitution and the
support of court precedents (Saffell 1982, 208). The courts generally consider the power of
taxation a local and municipal matter (Griffiths 1980, 3). The courts have broadly
interpreted local concerns to cover budgeting, spending, fiscal policy and the implementation
of new taxes (Catherwood 1997, 20).
Home rule in Colorado enables municipalities to expand their revenue generating
capacity (Stilwell and Gage, in press). Home rule offers local governments the opportunity
to expand their revenue base by employing selective sales taxes (Stilwell and Gage, in
press). Home rule charters can include tax levies precluded under the Colorado Revised
Statutes such as sales taxes on car rentals, restaurant meals, admissions to events, and
lodging (also referred to herein as "accommodations") (Stilwell and Gage, in press).
Specifically the Colorado Constitution provides home rule charters to include occupational
excise taxes (City of Englewood v. Wright 1961; City and County of Denver v. Duffy Storage
and Moving 1969; Farmers Mutual Auto Insurance Co. v. Temple 1971), excise taxes
{Deluxe Theaters, Inc. v. City of Englewood 1979), sales and use taxes (Berman v. City and
County of Denver 1965), admissions taxes, a transportation utility fee {Bloom v. City of Fort
Collins 1989), and authority to issue revenue bonds {Berman v. City and County of Denver
1965), but disallows income taxation {City and County of Denver v. Sweet 1958). Further a
home rule municipality cannot compel the state to collect municipal taxes {City of Boulder v.
Regents of the University of Colorado 1972) nor a university to collect a municipal
admission tax except for football and other events not related to the educational process
{City of Boulder v. Regents of the University of Colorado 1972).
69


The property tax is a primary source of tax revenue for many Colorado
municipalities, though in communities having enacted a sales and use tax, the property tax
often provides a declining portion of local revenue (Colorado Municipal League 1995, 19).
Denver, pursuant to its home rule powers, adopted the first municipal sales tax in Colorado
in 1948 (Colorado Municipal League 1995, 19). In 1967, state legislation granted authority
to statutory municipalities to levy sales tax (Colorado Municipal League 1995, 33). Since
then, Colorado municipalities have decreased their dependence on property taxes (Stilwell,
March 21, 1996). Property taxes as a share of municipal tax revenue now comprises 17.6
percent of municipal tax revenue (Colorado Municipal League 1995, 33). As comparison,
municipal property tax revenue was 36% in 1972. Colorado's property tax rate is nearly
one-third the national average (Tax Foundation 1993, 307). Fees, charges for service, and
intergovernmental revenues comprise most of the remainder of local government revenue
(Colorado Municipal League 1999a, 160).
In recent years the general sales tax has become the major source of revenue for
Colorado municipalities (Colorado Municipal League 1995, 31). In 1990, sales tax revenue
comprised 67 percent of Colorado municipal tax revenue compared with only 28 percent
nationwide. In 1997, there are 204 municipalities levying a local sales tax representing 76%
of all incorporated municipalities (Colorado Municipal League 1997(a), 123). The average
sales tax rate for is 2.66% that accounted for 70% of municipal tax revenue. This compares
to 16% from property taxes and 14% from other taxes.
Intergovernmental revenues are an important municipal revenue source (Colorado
Municipal League 1995, 115). However, intergovernmental revenue has steadily declined
over the last twenty years. For example, in 1973 federal and state aid comprised 29.7
percent of general revenues for municipalities and by 1993 that figure dropped to 13.3
percent. The state aid trend in particular is misleading. From 1983 to 1993 state aid to
municipalities has slightly increased from 9.2 percent to 10.7 percent of municipal
government revenue. However, two-third of state aid to municipalities goes to Denver. In
1993, $138.9 million of the $223.6 million went to the City and County of Denver that,
although listed as a municipality, provides relatively expensive state-supported programs,
70


such as social services, by nature of its city/county designation. Denver is one of only two
combined city and county in Colorado.4
The state shares four specific revenues with municipal governments. These are the
Highway Users Tax (motor fuel tax), Cigarette Tax (flat, per pack tax), Conservation Trust
(lottery funds), and Motor Vehicle Registration Fees. Of the four specific shared revenues,
only the Cigarette Tax is not earmarked for a specific use. Governments must calculate the
Highway Users Tax and Motor Vehicle Registration Fees based on number of vehicles and
miles of streets in a community and they must spend the revenue on new transportation
related construction, safety, improvement, maintenance, and capacity improvements and not
for administrative purposes. The State allocates Conservation Trust Fund revenue by
population which governments must spend on parks, wildlife, outdoor recreation,
environmental education, open space and natural areas.
Sufficient local government finance is important and financial demands are coupled
with the drive for municipal home rule (Grodzins 1966, 360). Grodzins believes municipal
governments should be entitled to sufficient revenue to finance the activities required of
them by custom and law (Grodzins 1966, 360). Colorado home rule enables municipalities
to implement new revenue sources if they derive it from and use it for local purposes
(Stilwell and Gage, in press; Stilwell, March 21, 1996).
Home rule in Colorado, because of its broad authority granted home rule localities,
has had a significant effect on Colorado intergovernmental relations. The financial
implications of home rule, in particular, impact intergovernmental relations. The
"maintenance of own-source revenues by state and local government is possibly the pivot
around which the future of intergovernmental relations will revolve" (Wright 1982, 452).
Revenue Limitation Provisions In Colorado
Colorado has three revenue limitation provisions that can affect local governments
(Stilwell 1999). These are the Gallagher Amendment, the Taxpayer's Bill of Rights
Broomfield is the second.
71


(TABOR), and the 5.5% statutory limit (Stilwell 1999). The Gallagher Amendment is a
limit on property value designed to minimize residential property taxes. The result is that
commercial property taxes increase. The Amendment is not a direct limitation on the
amount of property tax revenue collected by a local government. However, the Amendment
could secondarily effect local government property tax revenues by dissuading businesses
from locating in Colorado. The 5.5% statutory limit caps the annual mill levy increases to
5.5%. This limitation has become less of a real limitation on local governments because of
the often more restrictive TABOR mill levy provisions and because home rule municipalities
have excluded themselves from this statutory requirement.
Gallagher still applies to all municipalities in the state and does affect property tax
revenues (Brown 1999). Voters approved Gallagher in 1982 as a constitutional amendment
(Brown 1999, 1). It's intent was to meet the challenge of foster residential than commercial
development that would have, without the amendment, resulted in residential owners bearing
a greater tax burden than owners of non-commercial properties (Brown 1999, 2). The intent
of Gallagher was to "reform property tax administration and assessment procedures, and to
stabilize the incidence of property tax payment between residential and business properties"
(Brown 1999, 141).
The amendment requires biennial adjustments to the assessment ratios so the
proportion of tax collected remains at a fixed rate with 45% generated from residential
properties and 55% from non-residential properties (Brown 1999, 2). The assessment ratio
is the percentage of a portion of real property subject to property tax (i.e., a $100,000 house
with an assessment percentage of 10% would have a mill levy applied to a $10,000
valuation). The result has been a 21% residential assessment rate in 1985 dropping to less
than 10% in 1999 (Brown 1999, 2) resulting in a tax savings to residential property owners
of $3.1 billion from 1985-1997 (Brown 1999, 5).
A difficulty with the amendment is its breadth of application in a "one size fits all"
format. The assessment ratios are calculated on a statewide basis (Brown 1999, 30). Thus,
"any municipality that is significantly dependent on the property tax for revenues and is
highly residential with little business property might have to raise its mill levies just to
72


continue to receive the same dollar amount of property tax revenue each time the residential
assessment ratio is adjusted downward under Gallagher's provisions" (Brown 1999, 30-31).
TABOR constrained this ability to adjust mill levies (Stilwell 1999).
TABOR. One must consider the TABOR Amendment to the Colorado Constitution
in any review of Colorado government. The TABOR Amendment is the most recent revenue
limitation and may have the greatest lasting impact. TABOR mandates, among other things,
"state and local government revenues and expenditures cannot increase from one year to the
next by more than inflation and a defined growth factor" (Brown 1999, 3). If revenues
exceed the TABOR limit "the government must either ask for voter approval to keep the
excess, or refund it to taxpayers" (Brown 1999, 3) and voters must approve specifically all
increases in revenue by tax increase or similar (Colorado Constitution, Art. XX, § 20(4);
Brown 1999, 3-4). The TABOR amendment "both requires and allows municipal
governments to obtain voter approval at biennial general elections for any new tax, tax rate
increase, mill levy increase, assessment ratio increase, extension of any expiring tax, or any
tax policy change that results in a net tax revenue gain" (Brown 1999, 26).
TABOR has significant impacts on the finances of the State's municipalities (Stilwell
1999). ICMA considered TABOR "(a) leading example of a voter-adopted proposition that
limits both state and local governments....TABOR bars tax and spending increases by state
and local governments without voter approval" (Berman 1996, 34).
Before TABOR inaction, municipalities could increase mill levies to generate the
same amount of revenue as in the prior year (Stilwell 1999). As noted above, Gallagher
reduces property tax revenues in communities with primarily residential development. The
result is an interaction between Gallagher and TABOR where "a largely residential
municipality might find its property tax revenue declining because of Gallagher and, due to
TABOR, be unable to replace that revenue without voter approval" (Brown 1999, 9).
However, the courts have not definitively addressed the issue of increasing mill levies to
recoup lost revenue (Brown 1999, 38). Another result of TABOR has been a shifting by the
municipalities away from TABOR restrained tax revenues to other revenues such as fees,
73


charges, and fines (Brown 1999, 147; Stilwell and Schmatz 1999) and the increase in special
district governance as noted above (Stilwell and Schmatz 1999). ACIR predicted such a
result in 1962. The Commission said "(t)ax and debt limitations were patently conceived as
adequate to support local government without being burdensome to taxpayers. They have
severely restricted the functions of local government and have resulted in a great variety of
avoidance techniques such as ad hoc districts and special taxes and bonds" (ACIR 1962, 34).
The TABOR amendment supersedes other state or local provisions, including home
rule charter provisions, unless specifically approved by the voters (Stilwell 1999).
Municipal voters have been quick to opt out of TABOR's restrictions (Stilwell 1999). Since
TABOR's enactment, voters of 185 communities have approved a total of 250 ballot
questions authorizing their cities and towns to keep and spend excess revenue under TABOR
(K. Kelly, undated, 1) and the Colorado Municipal League found 325 of 356
"de-TABORing" ballot questions had been approved since TABOR's inception (Broadwell
1999). A recent statewide survey of registered voters found "almost two-thirds of the voters
in 1999 replied that they would not vote for the TABOR amendment again, if it were on the
ballot today" (Brown 1999, 206).
Brown found "(t)hose cities and towns that held successful elections under TABOR
appear to have enjoyed positive rates of growth in their total tax revenues and in sales tax
revenues. Their counterparts with no elections or only failed elections were seeing declining
overall tax revenues and sales tax revenues" (Brown 1999, 168) with smaller towns and
those more dependent on property taxes being hit harder (Brown 1999, 178).
The Gallagher and TABOR amendments pose significant economic challenges for the
state's municipalities (George 1999). One worry "of municipal governments has been that
when the economy makes its next downturn, TABOR's growth limits will require cutbacks
that are now unimaginable" (Brown 1999, 89). Further, by "(l)ooking at the total of
municipal revenues...it appears that the legal constraints imposed by the Gallagher
amendment and perhaps the TABOR amendment have influenced long-term growth trends"
(Brown 1999, 132). The constraints on the smaller communities on the state may be greatest
since prior to the amendments "total revenues of the smallest towns were increasing most
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rapidly" among population-based ordering of municipalities (Brown 1999, 209). These
trends may have impacts on the long-term fiscal viability of some small communities in
Colorado (CU Policy Collaborative 1999).
Summary of Literature Review
This review presents a survey of the definitions, descriptions, and origins of
municipal home rule as well as a comparative survey of home rule provisions in the states.
Such a survey of the literature provides a background for continuing with a theoretical
examination of municipal home rule. Home rule grew out of a desire for the cities to govern
better. The home rule movement "attempted to create a favorable climate for more direct
governing of cities by their citizens; to secure for municipalities adequate powers to meet
increased demands for services; and to avoid legislative interference with local government"
(University of Texas Institute of Public Affairs 1961, 1).
Urbanization led to increasing challenges in urban governance. These challenges led
to a reexamination of home rule; competency theorists argued for more state involvement in
urban governance to increase efficiency and effectiveness and democratic theorists called for
a strengthening of home rule to facilitate citizen involvement, control, and the root values of
America's democratic system.
The states have all pursued home rule differently. In Colorado there is strong local
control in the areas of land use and more state oversight of "statewide" issues. The Colorado
example demonstrates the push for fiscal control with a number of laws, most notably
TABOR. Box noted that Stillman (1982b) "characterized local public managers as being 'in
transition,' as they are caught between the trend toward greater public demands for local
services and democratic access to administrative processes, on the one hand, and the tax
limitation movement, which has cut resources, on the other hand (2)" (Box 1992, 324).
The existing literature raises a number of questions about municipal home rule. Since
adequate financing is the key for a government's ability to provide service a fundamental
question is how are home rule and finance linked? A municipality can have any of a number
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of home rule powers and authorities but adequate finances are necessary for administrators
to implement their broadened functions. Other questions arise relating to home rule's
relationship to municipal government efficiency, effectiveness, and democratic values.
The following research will delve deeper into the relationship between home rule and
municipal government finance. This research consists of two parts. The first is a multiple
regression statistical analysis to determine what, if any, relationship exists between home
rule and finance. The second is a case study analysis involving municipal officials to further
explore the financial question and to examine efficiency, effectiveness, and democratic
values.
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CHAPTER 3
METHODS AND PROCEDURES
Research Design
The goal of this research, broadly stated, is to identify relationships between home
rule status and the community. The research seeks to determine the relationship between
home rule and municipal finance and the effect of home rule on municipal efficiency,
effectiveness, and democratic values as viewed by municipal officials. Colorado is a focus
of this study. While not a microcosm of home rule nationally, it has a history of strong home
rule.
The research questions lead to a two-part research design. The design employs two
methodologies: multiple regression and case studies. This study first uses multiple
regression to analyze the relationship between sales tax revenue and home rule. The case
studies then broaden the financial research and further demonstrate the relationship between
home rule and municipal efficiency, effectiveness, and democratic values.
Multiple Regression
This study utilizes multiple regression to describe the relationships between sales tax
revenue raised by a municipality, the dependent variable, and the three independent
variables: the municipality's population, home rule status, and housing prices. The sales tax
revenue raised data are initially compared to the state sales tax revenues. Municipal sales
and use tax revenues are derived from Colorado Municipal League and State of Colorado
Department of Revenue Data.
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A revenue raised analysis will compare municipal sales tax revenue collected in
municipalities versus the State sales tax revenue collected in the municipalities. The State
sales tax only is imposed on the tax base allowed by state statutes. The home rule
municipality taxes this base plus any broader base allowed by their home rule charter. For
example, when buyers purchase taxable goods in a community levying a municipal sales tax
the consumer will pay a three-percent tax to the State as well as the tax rate imposed by the
municipality. If the municipal tax rate is, for example, three percent the consumer would pay
a total of six-percent tax on their purchase (excluding any other applicable sales taxes
imposed by other agencies).
There are three primary data sources beneficial in pursuing the research question.
These are the Colorado Municipal League, State of Colorado Department of Revenue, and
the United States Department of Census. All three organizations track myriad data. This
study utilizes some of these data. The independent variables of study were municipal
population (derived from Colorado Municipal League Data), municipal home rule status
(derived from Colorado Municipal League Data), and median home value of the municipality
(derived from United States Department of Census Data).
Secondary data were collected from various sources. The Colorado Municipal
League gathers the financial data from municipal audits, annual reports and budgets. They
also rely on survey instruments for some data utilized in this study. The Department of
Revenue is the collection arm of the State of Colorado and produces myriad reports
quantifying their efforts. The Census data is from the 1990 United States Census of
Population and Housing. These data were analyzed with Minitab and SPSS statistical
software programs.
The weaknesses of the data are few. The age of the Census data is one concern. This
study compares 1990 data to the 1996 and 1997 financial data from the Department of
Revenue and the Colorado Municipal League. This weakness is not significant in this study
because the study does not compare directly the two data; rather it considers the relativity of
the financial and Census data. The data have as their strength being reliably recorded and
systematically collected. All three data compilation sources prolifically track and
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disseminate information that academicians and practitioners putatively consider highly
credible.
The State of Colorado, like many municipalities, collects a sales tax. Thus, sales tax
revenue will be the focus of this study on municipal government in Colorado. The State of
Colorado imposes a three percent sales tax. The State records these revenues by the
municipality in which they collected them. Table 3.1 presents the descriptive statistics for
the State's 1996 sales tax revenues (COLOS&U) (Colorado Department of Revenue Office
of Tax Analysis). The State presents data for the revenue collected in 217 of the 269
communities. The revenue in the remaining 52 municipalities is too low for the State to
track individually by municipality. The mean sales tax revenue collected in each
municipality is $4,551,785. The median is $292,395 with a standard deviation of
$1,686,988.
/
TABLE 3.1:
Descriptive Statistics for Colorado's 1996 Sales Tax Revenues
N MEAN MEDIAN TRMEAN STDEV SEMEAN MIN MAX Qi Q3
217 54,551,785 $292,395 $1,686,988 $18,304,112 $1,242,564 2,820 2.20E+08 $104,965 $1,995,831
V
Median home value is the last major data set used in this study. The 1990 median
home value for all Colorado communities is $52,850 (data derived from U.S. Department of
Commerce Bureau of the Census). Excluding the extremes, which include Aspen with
median housing values exceeding $500,000, and Branson, Hartman, Campo, and Sheridan
with median values below $15,000, the median value rises to $53,100. Twenty-four of the
264 reported communities had a 1990 median home value exceeding $100,000. The
standard deviation is $57,827.
The dependent variable is the sales tax revenue generated by the municipality. This
study analyzes this variable against the independent variables of municipal population, home
rule status, and median home value. In initial analyses these three independent variables
proved the most influential on the dependent variable in addition degrees of freedom remain
low with only three independent variables. These initial analyses encompassed both
79


multiple regression and analysis of variance (ANOVA) undertakings on the four variables in
this study and other initially considered variables such as financial perception. The summary
tables of these initial analyses are presented in the Codicil section entitled Multiple
Regression Results Tables; the code descriptions immediately follow the Multiple
Regression Results Tables in the Codicil. The following Quantitative Analysis chapter
details this analysis and its findings and results.
Case Study
The study of the second question what is the relationship between home rule and
municipal finance, efficiency, effectiveness, and democratic values as viewed by municipal
administrators requires a methodology to identify and consider contextual factors. For
these reasons the case study method was selected.
Yin (1994, xiii) notes that despite the stereotype that the case study is a weak sibling
among social science methods (a stereotype that may be wrong) it continues to be used
extensively in social science research. In fact case studies are increasingly used as a research
tool (Yin 1994, 2). Case study research is among the hardest types of research to conduct
(Yin 1994, 54). Unlike statistical analysis, there are few fixed formulas of analysis (Yin
1994, 102).
The first and most important condition for differentiating among the various research
strategies is to identify the type of research question being asked (Yin 1994, 7).
Academicians prefer the case study in examining contemporary events when the relevant
behaviors cannot be manipulated (Yin 1994, 8). The case study's unique strength is its
ability to deal with a full variety of evidence documents, artifacts, interviews, and
observations (Yin 1994, 8 and 91). Yin asserts a researcher can claim replication if they find
two or more cases supporting the same theory (Yin 1994, 31). Researchers consider the
evidence from multiple cases more compelling and regard the overall study as being more
robust (Herriott and Firestone 1983, 14).
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The case study research herein follows the guidelines set forth by Yin and others.
These case studies will consist of five Colorado municipalities -- a multiple case study
design to facilitate replication logic. Evidence from multiple case studies often is more
compelling enabling people to regard the study as more robust (Herriott and Firestone 1983).
This study pairs these five municipalities into groups to facilitate a matched pair
approach. The groupings include one home rule municipality and one statutory (non-home
rule) municipality5 each having otherwise similar characteristics such as size, location,
population, structure, and services provided (see Case Study Selection Table in Codicil).
The research question results in a broad study of contemporary issues occurring within these
municipalities that is a strength of the case study method.
Yin describes four methods of collecting evidence; these are documentation, archival
records, interviews, and direct observation. This study utilized documentation and archival
records as foundation data and further developed, augmented, and corroborated the data
through personal interview. Using the various sources of data allows any finding or
conclusion in a case study to be more convincing and accurate (Yin 1994, 92). The
documentation utilized in this study includes memoranda, and media accounts and reports;
the archival records included municipal budgets, organizational and personnel records, and
secondary data from the Colorado Municipal League and the State of Colorado.
Interviews were requested from the chief executive and chief financial officer in each
of the six municipalities (see Letter of Request in the Codicil). A pre-test of the interview
demonstrated these two individuals would be most knowledgeable about the political and
financial environment surrounding the particular municipality's experience with home rule
and municipal finance. The pre-test transcript is in the Codicil as is the final set of interview
questions.
This study used a consistent set of questions for each interview. The questions have
an open-ended nature, asking key respondents both the facts about home rule in their
jurisdiction and their opinion about home rule and its impact on their municipality. These
The odd number of municipalities in the pairing is a result of including the City of Loveland.
Loveland facilitates a time-series analysis of self comparison as will be described below.
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interviews are essential to the case study evidence because of the human nature of home rule
and in particular the community's experience with the home rule form of government.
A one-hundred percent response rate was achieved. The chief executive and chief
financial officer from each of the studied municipalities were interviewed. The interviews
were conducted between January 6 and January 19, 2000, all taking place at the interviewee's
place of business. The author taped and transcribed the interviews. The transcripts from the
study interviews are in the Codicil to enhance reliability by enabling other investigators to
review the evidence directly and not be limited to this written report. The interview data,
being a verbal report, helped corroborate the information from other sources.
The main purpose of the interview was not to have the interviewee contrast the
differences between the home rule and statutory systems in the State; however, with the
broad nature of the open-ended interview format enabled some interviewees to discuss
specific differences they observed between the two systems. The purpose was to have the
interviewees describe their government's structure, format and authority to enable the
researcher to determine if there were certain aspects, procedures, or authorities of a home
rule government prohibited under the state statutes. The assumption is the interviewees are
expert in understanding their own system, more so than understanding other systems and
therefore being able to compare and contrast the two.
Yin and others have outlined in great detail the specific requirements of a valid and
reliable case study application. The research design applied herein follows these
requirements. First, it answers a how or why question (how do home rule and non-home
municipalities differ). Second, the study has a rationale or purpose (to determine the effects
of home rule). Third, there is a clear unit of analysis (Colorado municipal organizations).
Fourth, the researcher needs to link the data to propositions (this study is embedded in the
theoretical basis outlined in the literature review as will be demonstrated in the Combined
Findings). Finally there should be criteria for interpreting findings and developing theory
show how Colorado statutory and home rule municipalities differ, what are the effects of
those and what those differences suggest about home rule's theoretical bases.
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These case studies are descriptive (Yin 1993, 21). The purpose of the study is to
describe the effects of home rule. This study utilizes data and municipalities best enabling
the researcher to describe home rule in Colorado. The study uses secondary data to develop
a profile of the municipality including its financial, political, geographic, and historical
nature. The interview expands on this base with questions relating to policy, management,
quality-of-life, and finance (see Interview Questionnaire in the Codicil).
Summary of Methods and Procedures
This study will utilize both multiple regression and case study analyses. These
studies were completed and compared separately. This methodological triangulation (Yin
1994, 92; Yin 1993, 69) allows the findings to be much more convincing and accurate as it is
based on multiple sources and methods; "(t)he most robust fact may be considered to have
been established if three (or more) sources all coincide" (Yin 1993, 69 parenthesis in
original). These combined findings will consummate with conclusions, limitations,
recommendations, and relevance.
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CHAPTER 4
QUANTITATIVE ANALYSIS
Research Design
Sales tax revenue is a primary revenue source of Colorado municipalities (Colorado
Municipal League 1998(a), 8 and 126). Colorado home rule municipalities have greater
leeway than other municipalities to tailor sales tax codes (Colorado Municipal League
1998b, 93). These municipalities act on this liberty by overwhelmingly adopting tax
provisions permitted only to home rule municipalities (Colorado Municipal League 1996(b),
21-31). Therefore, as a step toward quantifying municipal home rule, the research question
posed in this study is: Does home rule augment a municipality's sales tax collections?
Examining this question is the purpose of this chapter.
Various methods exist to answer the research question. The revenue raised analysis
is the focal point of the study and the dependent variable. A revenue raised analysis
compares the revenue raised in one jurisdiction to that of another. This analysis has the
benefit of tracking fluid and dynamic revenue sources such as sales taxes. If this study focus
were on a more stable revenue base, such as property tax, a fiscal capacity model may prove
more beneficial (Reeves 1986, 151). However, because sales taxes can be shifted and
exported so easily (as easy as it is for a competing retailer to move across a municipal
boundary), a revenue-raised analysis can provide a more regional picture (Ladd and Yinger
1989, 46).
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Home Rule and Population
A second variable was population. There are 76 home rule municipalities out of the
State's 269 cities and towns (Colorado Municipal League 1996(a), 80).6 The population of
all Colorado municipalities is 2,720,411 (Colorado Municipal League 1998(a), 129). The
mean population is 9,701 with a median of 982 and a standard deviation of 41,393. The
community with the smallest population is Lakeside with 11. Denver is the largest city with
a population of 491,101 (see Figure 4.1).
The smallest home rule municipality is Ophir with a population of 89 and the largest
statutory community, with a population of 16,995, is Louisville. Home rule is and has been
predominant in Colorado's largest communities (Sloan 1976, 257). All 19 communities with
a population over 20,000 are home rule. Nine percent of municipalities with a population
below 2,000 are home rule (16 of 183) and 61% of the municipalities with a population
between 2,001 and 19,999 have adopted a home rule charter (41 of 67).
Figure 4.1
Number of Municipalities
By R)pulation Group
<100 500-999 2000-4999 10000-19999 50000-99999
100-499 1000-1999 5000-9999 20000-49999 >100,000
Reputation
GB Municipalities Home Rule Munis.
Figure Source: Colorado Municipal League 1996(a).
Population and Home Rule Status Data used herein are from Colorado Municipal I eagne, 1996.
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The evolution from statutory to home rule forms of government has been relatively
steady since the 1950s. Denver adopted the first charter in 1904 (Colorado Municipal
League 1992, 1; Ackerman 1965, 3). Loveland adopted the most recent charter in 1996
(Stilwell and Gage, in press). Seven municipalities adopted charters prior to 1950, thirteen
municipalities went home rule in the 1950s, fifteen in the 1960s, twenty-one in the 1970s,
twelve in the 1980s, and seven in the 1990s (Colorado Municipal League 1992).7 Figure 4.2
depicts this information. The State legislature's adoption of the Municipal Home Rule Act of
1971 clarified charter adoption procedures and may have resulted in an increase in the
number of municipalities adopting a home rule charter as it facilitated and expanded home
rule opportunities.
Figure 4.2
Periods in w hich Municipalities Adopted Home Rule Charters |
25 -----------------------------------------------------------------
1904-1949 1960-1969 1980-1989
1950-1959 1970-1979 1990-1998
Period of Charter Adoption
Figure Source: Colorado Municipal League 1992.
Larger municipalities conflate significantly more revenue than the more numerous
smaller municipalities in Colorado. The mean 1995 General Fund8 revenue for all
Data for the City of Dillon's home rule charter adoption date are not included in this data set.
Each individual municipality may define "General Fund" how it chooses; these data describe
General Fund revenue as defined by the municipality.
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municipalities is $7,642,090 with a median of $637,877. The standard deviation is
$31,127,888. The skew is similar in 1996. The mean 1996 general fund revenue is
$8,370,151 with a median of $752,705 and a standard deviation of $40,310,416.
This skew may suggest benefits to eliminating the few large cities from the study.
The finances between the few largest communities, which have general fund revenues
exceeding one-hundred million dollars annually, and the revenues for the remaining
municipalities may suggest a fundamental difference that will be analyzed further below.
A home rule municipality, with its broader taxing authorities, is expected to have
greater annual sales and use tax revenues than their statutory counterparts. The rationale for
this prediction is that the broader taxing authorities of the home rule municipalities offer a
deeper revenue base that would result in a greater level of annual tax revenue.
Multiple Regression Analysis. Regression analysis was used in this study to explain
the relationship(s) between adjusted sales and use tax revenue, home rule status, population,
and median home value. The dependent variable is the sales and use tax revenues of each
Colorado municipality. These data were adjusted to correct for varying sales and use tax
rates and adjusted the revenue collected to demonstrate the amount of revenue collected if
the municipality had imposed a three percent sales tax. The adjustment to a three percent
equivalent tax provides consistency in the data, is near the state-wide average rate of sales
and use tax (note the average and a source), and could facilitate comparison to the State of
Colorado's three-percent rate on its sales tax collections
The independent variables are all quantitative. The municipal population is the first
independent predictor variable. A dichotomous independent variable was created to denote
municipal home rule status. Dichotomous independent variables do not cause the regression
estimates to lose any of their desirable properties (Lewis-Beck 1980, 67). The third
independent variable is the median home value within the municipality.
These three independent variables were chosen for a number of reasons. First,
median home value and population varies significantly across the State and utilizing these
variables can facilitate Statewide comparisons. Second, the home rule dichotomous variable
87


can isolate home rule status. Third, median home value is an indicator of income levels in
the municipalities. Finally, it is important to have the independent variables be significant
predictors of the dependent variable and these variables should be the best predictors of
adjusted sales and use tax revenue (McClave and Dietrich 1988, 684).
Placing the adjusted sales and use tax revenue measure and the explanatory variables
in equation form, the multiple linear regression model represents the following:
Y = a + B, (Population) + B, (Home Rule) + B3 (MedhomeS) + e
where:
Y = the adjusted sales and use tax revenue (also abbreviated as "ADJTS&U")
Population = the municipal population (also abbreviated as "POP")
Home Rule = Home Rule (1), Statutory or non-home rule (0) (also abbreviated as "HR= 1")
MedhomeS = The median value of homes in the municipality
Results
Table 4.1 displays the results of the analysis. The table includes a predictor table and
an Analysis of Variance (ANOVA) table. The regression findings describe a relationship
between two of the three independent variables with the dependent variable (Lewis-Beck
1980,47).
The regression results suggest that population and median home value significantly
influence the municipality's sales and use tax revenues. However, home rule status appears
to have no significant impact on sales and use tax revenue. Population and median home
value have statistically significant effect of the municipal sales and use tax revenue
generated as denoted by the p-values below the .05 threshold and a t-ratio exceeding 2
(Lewis-Beck 1980, 56). Home rule status, with a t-ratio of 0.99 and a p-value of 0.326 is not
statistically significant.
88