python dictionary passed as an input to a function acts like a global in that function rather than a local

Python's parameter passing acts a bit different than the languages you're probably used to. Instead of having explicit pass by value and pass by reference semantics, python has pass by name. You are essentially always passing the object itself, and the object's mutability determines whether or not it can be modified. Lists and Dicts are mutable objects. Numbers, Strings, and Tuples are not.

You are passing the dictionary to the function, not a copy. Thus when you modify it, you are also modifying the original copy.

To avoid this, you should first copy the dictionary before calling the function, or from within the function (passing the dictionary to the dict function should do it).

To support what @Casey Kuball said, every object in Python is passed by reference. Each function receives a reference to the actual object you passed. Modifying these objects depends on whether they are mutable data types.

In essence, one can say that mutable objects like dictionaries, sets, and lists are passed by reference. Immutable objects like int, str, tuple are passed by value.

You should also note that there are cases where mutable objects are overwritten in a function thereby losing reference to the actual object passed to the function.

>>> def testfun(b):
...     b = b or {}  # Creates a new object if b is false
...     b['test'] = 2
... 
>>> b = {}
>>> testfun(b)
>>> b
{}

When you pass a basic object like an integer or a string to a function, if you change it inside the function nothing occurs to the corresponding object outside the function because when you are leading with a basic object, python passes it by value.

However, if you pass a dictionary or a list to a function they are passed by reference, which means you will have that behaviour: the object outside the function is changed, as you have seen.

edit: In addition, there is a difference between passing by value or by reference: by value, a "copy" of the object is made in order to be used in the function; by reference, the exactly same object is passed through reference and modifications to it inside the function are visible outside. By definition python passes its immutable objects by value, and its mutable objects by reference.