And yes, maintaining the peg and free movement means that the higher level government does decide what to give them. That's what giving up sovereignty at a lower level implies.
Even at local level, they need manpower, not land. So you end up relying on fungibility.
[1]https://constitution.congress.gov/browse/essay/artI-S10-C1-2...
I'm also not exactly sure what you mean by your manpower statement. Say a town wants to build traffic lights and a new intersection. Surely it's easier to collect money and pay an outside firm (which may or may not have local employees) then engineer the road/lights locally?
Same with police. They use tons of tools and systems to both do their job and internally. Obviously raising money is going to be more efficient than each town designing its record management tools from scratch.