What did the Headlee Amendment establish regarding state and local government funding?

The Headlee Amendment, adopted in 1978, was significant in reshaping the financial relationship between state and local governments in Michigan. One of its primary provisions mandates that when the state imposes a new program or a higher level of service on local units of government, the state must reimburse those local entities for the costs associated with the implementation of such programs. This was established to ensure that local governments are not unduly burdened by state mandates without financial support. This aspect of the Headlee Amendment is crucial because it provides a measure of financial autonomy for local governments, ensuring they are not forced to absorb costs that originate from state-level policy decisions.

In contrast, the other options do not accurately reflect the intent or provisions of the Headlee Amendment. The reduction of funding for state programs, elimination of taxation for local governments, and prohibition of changes to local budgets do not correspond with what the amendment established or aimed to achieve in balancing state and local funding responsibilities.