Research Note Accounting for State Authorization in Local Economic Development Policy Usage Eric J. Stokan 1 Abstract This article empirically tests the impact of failing to account for state-level authorization when explaining the factors that lead municipalities to use tax abatements, tax increment financing, and enterprise zones. Although existing research implicitly assumes that state-level authorization exists, this article demonstrates that this unfounded assumption leads to biased estimates using the 1999, 2004, and 2009 International City/County Management Association (ICMA) Economic Develop- ment Survey data on a nationwide set of municipalities. This article refines what is known about the factors, leading to the usage of these three policies before offering implications for practitioners and researchers of local economic development. Keywords local economic development, tax incentives, federalism, research design It is no surprise that state and local govern- ments try to bolster their economies. In 2012, Louise Story, in a series of New York Time arti- cles, estimated that states and local govern- ments were “giving up more than US$80 billion” annually on economic development incentives. Although states provide the legal authority for the usage of these incentives, it is up to local governments to use them as a means to attract businesses and people. Not all states authorize every economic development policy, nor do all local governments use each for which they have authorization. Arizona, for example, is the only state in the history of the United States to provide no authorization for tax increment financing (TIF) to its local gov- ernments. Thus, local governments in Arizona have no legal mechanism to use TIFs as a means to bolster their local economies. This complex interplay between states’ powers to authorize and local governments’ decision to use economic development incen- tives has received little scholarly attention (Rubin and Rubin 1987; Reese, Larnell, and Sands 2010; Stokan 2013). Most research has failed to account for this relationship when con- sidering why local governments use specific economic development policies, save for Reese and Malmer (1994) who understood that 1 Department of Political Science, Towson University, Towson, MD, USA Corresponding Author: Eric J. Stokan, Department of Political Science, Towson University, LA 3228, 8000 York Road, Towson, MD 21252, USA. Email: estokan@towson.edu State and Local Government Review 2018, Vol. 50(1) 24-36 ª The Author(s) 2017 Reprints and permission: sagepub.com/journalsPermissions.nav DOI: 10.1177/0160323X17728780 journals.sagepub.com/home/slg