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Today, it is not uncommon to see a patchwork of legal decisions granting states more discretion in some policy areas, such as marijuana use, while providing the federal government more authority in others, such as same-sex marriage. Decisions about which level controls policy can reflect the attitudes of government officials and the public, political ideology and the strategic advantage of setting policy on a state-by-state basis, and the necessity of setting uniform policy in the face of an economic downturn or unanticipated national security threat. What has not changed over time is the central role of the U.S. Supreme Court’s views in determining how power should be distributed in a federalist system.

Power at the substate level

The U.S. Constitution is silent on the dispersion of power between states and localities within each state. The fact that states are mentioned specifically and local jurisdictions are not has traditionally meant that power independent of the federal government resides first with the state. Through their own constitutions and statutes, states decide what to require of local jurisdictions and what to delegate. This structure represents the legal principle of Dillon’s Rule    , named for Iowa Supreme Court justice John F. Dillon . Dillon argued that state actions trump those of the local government and have supremacy.

“Why Existing Law Won’t Stop Corporations from Harming Your Community,” August 31, 2015. http://celdf.org/2015/08/why-existing-law-wont-stop-corporations-from-harming-your-community/ (March 14, 2016).
In this view, cities and towns exist at the pleasure of the state, which means the state can step in and dissolve them or even take them over. Indeed, most states have supremacy clauses over local governments in their constitutions.

However, for practical purposes, state and local governments must work together to ensure that citizens receive adequate services. Given the necessity of cooperation, many states have granted local governments some degree of autonomy and given them discretion to make policy or tax decisions.

Jesse J. Richardson, Jr. 5 August 2011. “Dillon’s Rule is from Mars, Home Rule is from Venus: Local Government Autonomy and the Rules of Statutory Construction,” Publius 41, No. 4: 662–685.
This added independence is called home rule    , and the transfer of power is typically spelled out within a charter    . Charters are similar to state constitutions: they provide a framework and a detailed accounting of local government responsibilities and areas of authority. Potential conflicts can come up over home rule. For example, in 2015, the State of Texas overruled a fracking ban imposed by the City of Denton.
Max B. Baker, “Denton City Council Repeals Fracking Ban,” Fort Worth Star-Telegram , 16 June 2015. http://www.star-telegram.com/news/business/barnett-shale/article24627469.html.

Like state governments, local governments prioritize spending on building and maintaining the transportation infrastructure, supporting educational institutions, promoting community protection, and funding healthcare.

Roberton Williams and Yuri Shadunsky. “State and Local Tax Policy: What are the Sources of Revenue for Local Governments?” http://www.taxpolicycenter.org/briefing-book/state-local/revenues/local_revenue.cfm (March 14, 2016).
As shown in [link] , local governments, just like state governments, receive a sizeable chunk of their revenue from grants and transfers from other levels of the government. The next biggest source of revenue for local governments is property tax collections.

Questions & Answers

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Source:  OpenStax, American government. OpenStax CNX. Dec 05, 2016 Download for free at http://cnx.org/content/col11995/1.15
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