Quebec municipalities face a critical financial crisis. Both their main sources of income, (governmental transfers and land taxes) are diminishing while demands from taxpayers multiply. The 80's economic crisis has slowed down the growth rate of commercial and industrial investments, thus reducing the sources of income. Moreover, since higher governments prioritise deficit reduction, intergovernmental transfers towards municipalities have been reduced. This situation is not particular to Quebec, all over the world, municipalities have taken on a greater number of responsibilities and have witnessed serious reduction in their budgets. In this report, we examine the measures taken by central governments in response to the difficult financial standing of municipalities. The report is divided into six parts, each one analyzing, from an economic standpoint, the measures undertaken by central governments in response to municipal financial problems. We discuss issues such as municipal mergers, control of municipal debt, taxes in general, the concept of user/payer, municipal equalization and competition between municipalities.