Local autonomy is a term that is frequently employed in both academic and popular discussions of local government, but it is rarely defined conceptually in a careful way or operationalized and subject to empirical research. In this paper we present a working definition of “local government autonomy” based on dimensions fundamental to the concept, identify variables to operationalize those dimensions, utilize factor analysis to combine those variables into underlying component factors, and create an overall Local Government Autonomy index that can be used as a variable in future research. We also use cluster analysis to create a classification scheme for different forms of local
government autonomy. Finally, by using our local government autonomy index and factors as independent variables in a regression model we find they are highly useful for predicating the consequences of related local finance research questions.