Fiscal centralism affects central—local relations in more ways than simply constraining local autonomy. In the case of the Netherlands, central—local policy communities, in which nongovernmental organizations may play a significant role, divide local policymaking into sectors. Responsiveness to local requirements is highly skewed. Decentralization to improve local policymaking is frustrated by the urge for equality in this one-constituency state. The pillarization in the formative decades of the welfare state contributed to the development of this characteristic of the Dutch polity. These central—local relations are not conducive to innovation, which is required for local implementation of environmental policy. Sectoral boundaries preclude the essential integration of this policy. Municipal development plans, essentially designed to improve local resources, defy centrally devised norms and even prevent proper application of environmental impact assessments in central government's decisions on motorways.

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