States can effectively mandate local taxes by making eligibility for state aid contingent on local governments levying them. For example, Florida requires local governments to levy certain gasoline taxes and Arkansas requires local income taxes in some school districts. Such moves can become quite elaborate. For example, in the 1990s, California: (1) allowed its temporary 0.5% sales tax surcharge to expire, (2) induced nearly every county to adopt a new 0.5% local option tax leaving taxpayers paying the same amount as before, and (3) adjusted state aid to counties to leave both state and county finances in about the same condition as before the shift.

The subject is highly complex, but states can effectively mandate local property tax increases through their school aid formulas, as Georgia and other states have done. The mechanism can be as blatant as a requirement of a minimum local tax effort to receive state aid and as subtle as increasing the tax rate assumed in calculating the local effort subtraction in school foundation formulas.