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The state and local governments throughout the United States interact within a complex system of multilevel governance to advance sustainability. However, we know little about what this hierarchical system of exchanges means for municipalities as they work to achieve energy efficient government operations. Drawing on a perspective of “contested federalism”, we examine how the transaction costs of state–local government relations affect the efforts of U.S. cities to lead by example and promote sustainability within their internal processes. We apply a Bayesian item response theory approach to assess the effects of state-level fiscal and policy interventions on municipal commitments to energy efficiency programs within their internal operations. Our findings suggest that increased fiscal support for state energy programs enhances municipal commitments to government focused energy efficiency. We also find a positive connection between state energy efficiency standards and municipal efforts to enhance energy efficiency within their internal operations. The alignment of state resources and policy efforts with municipal actions can reduce commitment and agency costs that obstruct policy outcomes. The findings speak to the importance of multilevel governance exchanges in municipal efforts to become leaders in sustainability.

How State Interventions affect Municipalities Taking the Lead in Sustainability