State and local governments are at a financial crossroads. As the federal government attempts to reduce its deficits, state governments will have to provide a greater share of support for mandatory social programs. Local governments face demands for new initiatives in education and for civic improvements. Both have obligations to employee pension plans that are large and still relatively untested. Running counter to these claims on state and local budgets is a voter effort to limit the amounts that governments may tax or spend.
This fourth edition of James A. Maxwell's classic and widely acclaimed book will help both layman and lawmaker understand the choices open to their governments. It provides a lucid, nontechnical analysis of state and local finance. It gives concise descriptions of the taxes, grants, debt issues, and user charges that finance state and local government and discusses their relative virtues and drawbacks. It traces the history of state and local finance and presents statistical data on expenditures, federal aid, revenue from taxes and user charges, debt, and pension funds. The new edition, in recognition of changes since the mid-1970s, also includes a separate chapter on financing education and broadened analyses of federal grant programs, employee retirement systems, and nonguaranteed municipal debt.

J. Richard Aronson is William L. Clayton Professor of Economics and director of the Fairchild-Martindale Center for the Study of Private Enterprise at Lehigh University, in Bethlehem, Pennsylvania.John L. Hilley worked in the White House as senior adviser and head of legislative affairs to President Bill Clinton from February 1996 to January 1998. In this role, he oversaw and participated in the negotiation of all major legislation. Before moving to the White House, Hilley served as chief counsel for Senate Democratic Leader Tom Daschle, chief of staff for Senate Majority Leader George Mitchell, and majority staff director for Senate Budget Committee Chairman Jim Sasser. In the private sector, he has served as executive vice president of the National Association of Securities Dealers (NASD) and as chairman and CEO of NASDAQ International. He received his Ph.D. in economics from Princeton University.