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  Local governments are financed in several different ways. The services the government provides and the regulations passed down by higher governmental authority determine how the local government services are financed. Revenue sources for local governments are constantly reviewed to determine where funds can be earned to pay for all the expenses for the services provided to the citizens who live in within the local government's boundaries.
  
  

Intergovernmental Transfers

• Local governments get the bulk of their money from intergovernmental transfers. According to the Tax Policy Center in a study done in 2006, 38 percent of local government's finances came from another government. The money is in the form of grants or earmarked funds for restricted use. The use is dictated by the government supplying the funds. The local government is simply a bureaucracy that distributes the funds for use.
  
  

Property Tax

• Local governments assess property tax on its residents to finance operations. This source of revenue is the most dynamic aspect of local government financing. The leaders and elected officials of the local government can raise taxes or lower taxes based on the level of services they wish to provide to citizens. The Tax Policy Center determined in 2006 that 28 percent of a local government's revenue came from property taxes. The amount paid by an individual citizen is based on the size and value of the property that she owns.
  
  

Sales Tax

• Local governments have the right in some areas to charge a sales tax. Sales taxes charged by a local government are usually in addition to the state sales tax. Several states cap the amount of additional tax a local government can charge. In 2006, the Tax Policy Center determined, this accounted for 6 percent of a local government's finances. Sales taxes are levied more often by larger local governments such as cities.
  
  

Charges for Services

• According to the Tax Policy Center, 23 percent of a local government's financing came from services and miscellaneous receipts in 2006. Governments charge for parking on streets, parking in garages, parking tickets, traffic tickets, fees for licenses and document copying fees. These financing sources are added to the budget as revenue to further offset costs.
  
  

Other Financing Sources

• Local governments in some cases charge an earned income tax. An earned income tax is charged by these local governments to assess taxes on renters or people who reside within the local government's boundaries and do not own property. The Tax Policy Center attributed these finances as 2 percent of money collected to finance local government in 2006.
  
  Local governments are able to collect fees for special programs that are often local or specific to that particular government. It could be things like parking permits, fees for services, interest on past due taxes, or anything not included above. According to the Tax Policy Center this makes up 3 percent of local government financing.