There is increasing interest among both intellectuals and the general public in the connection between politics and economics. This study explores these inter-relationships generated during the period of democracy in Spain at the level of local government, in the light of the theory of public choice, a model developed among other things to study the problems originated by human behavior in the field of collective decisions. The results of the empirical analysis, carried out through a survey of a sample of 256 municipalities, strengthens the argument that a more in-depth examination is required into the principle of fiscal equivalence at lower levels of government as the most appropriate form of controlling the growth of public expenditure.