Co-authored by Dr. Adam Yoder, Founder and Principal at Northway Intelligence
The issue of governing authority for cities, towns and villages has long existed in the U.S. and has resulted in varying levels of local authority across states, with local governments falling on the spectrum of Home rule and Dillon’s rule. Home rule is the legal principle that gives local governments the power to enact policies and provide services locally, while Dillon’s rule requires the state to specifically sanction an action or grant local authority to municipalities. Another key driver in the local authority landscape is state preemption — when a higher level of government supersedes a lower level of government — which NLC has tracked the costs of, ranging from constrained budgets to limits on service delivery.
But what happens when municipalities do have expanded legal autonomy, like home rule? New research on Pennsylvania’s COVID-19 pandemic recovery found that local autonomy produces measurably better economic outcomes, and communities with the most benefits often had the highest needs.
In 2021, the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program, part of the American Rescue Plan Act (ARPA), provided local governments a combination of direct federal funding with flexible rules to aid the response to the COVID-19 pandemic. The research examined how 103 Pennsylvania counties and municipalities used their SLFRF allocations. To measure how effectively local governments recovered during the pandemic, the research study analyzed unemployment recovery rates during the initial SLFRF program period.
The findings challenge two common assumptions about economic resilience and the legal frameworks that govern localities. Rural municipalities outperformed urban ones and municipalities operating under home rule charters recovered faster and more completely than those operating primarily under Dillon’s rule.
Key Findings
Throughout the study, home rule charter status was a statistically significant predictor of stronger unemployment recovery. Home rule municipalities outperformed comparable Dillon’s rule municipalities by approximately 2.5 percentage points, on average. This pattern was consistent even after controlling for the size of SLFRF allocations, population, form of government and regional variation across Pennsylvania.
This advantage was rooted in the legal latitude afforded to home rule municipalities rather than the form of government itself. Form of government (i.e. council-manager, mayor-council) had little impact on economic recovery once other factors were controlled for, like population and SLFRF allocation amount.
Home rule municipalities have broader authority to structure their own governance, adapt their decision-making processes and respond to local needs more sufficiently. In a fast-moving crisis, that flexibility presents an operational advantage.
However, the home rule advantage did not distribute evenly. In a subsample of rural local governments, the advantage grew substantially. Home rule municipalities outperformed their Dillon’s rule counterparts by approximately seven percentage points, and home rule charter status emerged as a significant factor as well.
The home rule advantage supported Pennsylvania’s rural governments because of their structure and access to resources. Due to smaller staff, tighter budgets, and thinner organizational redundancy, a rural municipality often has fewer supports to help address a crisis when it hits. By having the legal flexibility to act, reorganize and respond without the common procedural delays associated with urban municipalities, home rule becomes more valuable. However, home rule does not replace organizational capacity, but it can minimize barriers to using existing capacity.
Opportunities for Home Rule Reform
Pennsylvania’s pandemic unemployment recovery data provides a practical example for how accessible home rule and optional charter status can support smaller and rural municipalities. In this study reviewing pandemic recovery, rural, home rule communities had the most to gain from expanded legal autonomy. But, historically, they have the most barriers to accessing it.
The opportunity to update the current legal frameworks for local governments to access home rule is ripe and can aid in the long-term health and resilience of local communities. When considering ways to improve the accessibility of home rule, state legislators could review existing pathways to home rule and optional charter status to assess barriers (i.e., administrative, financial) that could disproportionally impact smaller municipalities. In this review, they could also examine current municipal governance frameworks and how they could be inadvertently restricting communities with limited capacity to respond during a crisis.
For local leaders interested in evaluating whether home rule or optional charter status makes sense for your community, this research provides a data-driven reason to start that conversation.
The degree of home rule available to municipalities varies greatly between states. Currently, 44 states afford home rule to their municipalities in some capacity (this includes states that limit home rule to communities above a population threshold or by form of government), four states are subject to Dillon’s Rule, and two states have undetermined or mixed home rule access.
However, even within home rule states, the level of authority delegated to municipalities and opportunities for home rule varies greatly. NLC’s Principles of Home Rule for the 21st Century (PDF) provides localities an understanding of possible paths to reform home rule in the current local authority climate, such as through a constitutional update or a ballot referendum. The pandemic was an unplanned stress test of how local governance structures perform under pressure. The next crisis will come. The governance structures and legal frameworks that determine how communities respond to it are being shaped, or constrained, right now.
Learn More
To continue learning more about the current landscape of local authority, visit NLC’s Local Authority Dashboard.
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