This paper provides a general framework for understanding the political economy and fiscal determinants of sanitation service provision by urban local governments. The paper will address several questions: what do we expect to influence spending on local sanitation? Do different fiscal instruments have an impact on expenditure levels? Do increased local revenues lead to increased expenditures over the long term? What role do different stakeholders play in determining expenditure levels? The paper first looks at the role of political factors in constraining local expenditure decisions, then turns to a review of the fiscal determinants of service delivery expenditures.