I was thinking of a few things. First, unemployment of the kind you speak of is cyclical, so I'm not sure a 10 year payroll tax cut is an optimal amount.

There is also the case of the Austrian case of heterogeneous capital and labor. Let's say that the rate of unemployment it takes for a precinct to eliminate the payroll tax is twice the national average, and a given precinct is a hair above that rate. Now its payroll taxes are eliminated and workers enter. But in a nearby precinct, unemployment was 3x the national average (and therefore in worse economic shape), so it's payroll taxes are gone too. Well, the first precinct might attract specific labor that the second (and more needy) precinct could use more so, and probably needs more. So there's a potential coordination problem there.

Also, this idea gives precincts incentives to underestimate their unemployment rate because if those rates rise too high then that will lower taxes and therefore revenue for that municipality. They won't be able raise funds for local government.