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This paper represents the first comprehensive effort to provide a theoretical and empirical explanation of systemic corruption in Croatian local government. It follows the logic of the selectorate theory, according to which staying in power for long periods of time depends on creating a small group of loyal but powerful supporters (the winning coalition). Mayors that exist within such environments not only maximize their chances of staying in power; they also engage in greater corruption and set higher taxes. Its citizens are stuck in a negative spiral of corruption, high taxes, and a politician that regardless of this keeps winning elections. The paper makes two main contributions to the current literature. First it provides a theoretical extension of the selectorate theory to Croatian local government by explicitly modeling the link between corruption and winning coalitions, and second, it empirically verifies the theoretical findings using a novel matching approach called entropy balancing.