Local government finance
Resourcing local government remains a central challenge to effective decentralisation. This section has content relating to different models of fiscal decentralisation, options for identifying new sources of local revenue, such as local property tax; and strategies for improving collection and deployment of own-source revenue. It also offers information about improving the borrowing potential of local government, innovative financing models such as municipal bonds, shared services, and public private partnerships.
Featured
A Recipe for Fiscal Trust ∗
Cities across Canada face an enormous infrastructure deficit. From 100-year-old water mains to transit systems in vital need of upgrading and expansion, Canadian infrastructure is widely recognized to be in dire straits. And while the majority of Canadians elected a new government that was prepared to run a deficit to fund infrastructure, these funds alone will not cover the investments needed. Local governments need to make significant financial investments, too, and must raise revenues through taxes, user fees, and possibly new revenue tools. But before they can take these actions, they have to build trust to convince their residents that new revenues are needed and will be spent wisely. What does it mean to build trust? This paper examines the notion of trust and how governments can build it using: • Good information: relevant data made accessible to citizens and attractively packaged to enhance transparency; • Good communications: good stories that are well told, with relevant information distributed through a variety of channels (using open government tools and techniques); • Good engagement: inclusive and meaningful opportunities for dialogue about policy decisions to build the continuum of trust (using a variety of mechanisms); • Credibility: building an effective track record and controlling costs (through better performance benchmarking and other approaches); • Earmarking of funds: creating a dedicated fund that clearly links revenues raised to specific expenditures, and regularly reporting on the progress of projects funded. This research shows that there are concrete and practical steps that cities can take to build fiscal trust – but there are no shortcuts. Trust-building is a long-term proposition that takes resources. Cities must invest the time and dedicate the resources to build trust through all of the steps outlined, and continue to do so as part of their regular activities.
Author: Dina Graser and Pamela Robinson Publisher: http://munkschool.utoronto.ca/imfg/imfg-perspectives-paper-how-can-local-governments-build-public-trust/ Publication year: 2016
Giving local governments the reboot: Improving the financial sustainability of local governments ∗
In the two decades from 1995 to 2015, Australian local governments experienced a fourfold increase in expenditure. Even more striking though, is that during this same period many local governments were stripped of their water and sewerage functions – so these figures actually underrepresent the real picture. This report proposes a range of suggestions to address the financial sustainability of local government.
Author: Roberta Ryan and Joseph Drew Publisher: The McKell Institute Publication year: 2016
Improving subnational government development finance in emerging and developing economies: toward a strategic approach
Considerable attention has been given to enhancing subnational development finance in response to the 2008 global financial crisis and recent global development agendas, including the Sustainable Development Goals, Financing for Development, and Habitat III/New Urban Agenda. Much work on this topic is fragmented, focusing on specific elements of development finance: fiscal transfers, capital market access, public-sector lending agencies, or public-private partnerships. Most countries, however, have a range of subnational governments with varying needs and capacities that require different and evolving mixes of development finance mechanisms. Enabling greater subnational borrowing is often desirable but requires adoption of other reform policies to improve the fiscal capacity and creditworthiness of subnational governments over time. This paper reviews the rationale and potential for improving subnational development finance, outlines the overall landscape of institutional arrangements available for this purpose, and considers broad challenges involved. Based on a review of global practice and experience in selected Asian developing countries with a range of special entities and innovations to enhance subnational investment, it proposes a more integrated, strategic approach to building subnational development finance.
Author: Paul Smoke Publisher: Asian Development Bank Publication year: 2019
Structural reform, revenue adequacy and optimal tax assignment in local government
A striking feature of local government reform in many Commonwealth countries has been a heavy reliance on structural reform, often in the form of forced local council amalgamation. This paper argues that the long-run success of structural change in local government hinges on several key factors, not least that voluntary rather than compulsory council mergers have a far greater chance of success. A second key ingredient resides in a high degree of local autonomy in both the composition and operation of decentralized governmental functions. A third vital factor lies in ensuring that revenue and tax assignment is sufficient to provide local government with financial autonomy. Finally, adequate powers of taxation need to be accorded to local government and this requires careful consideration of the types of taxes most suited to local government.
Author: Lorenzo Robotti, Brian Dollery Publisher: Commonwealth Journal of Local Governance Publication year: 2009
Approaches to strengthening local government: lessons from Sri Lanka
This article sets out to describe recent approaches to strengthening local government within the framework of the World Bank's Municipal Management Programme (1985–95) in Sri Lanka. The article examines a number of innovations adopted within the programme that are of general relevance to the task of strengthening local government throughout the developing world. The article briefly outlines the background to the present system of local government showing that, whilst existing structures and functions remain relatively weak, a number of important innovations have been introduced to assist with the process of strengthening local resource mobilization and improving performance in service delivery, and enhancing certain aspects of accountability, particularly those areas concerned with the allocation and use of public funds. Since a number of these innovations have wide applicability to the process of local government strengthening and reform it is hoped that this article will demonstrate the practical relevance of certain key innovations for practitioners and policy makers elsewhere.
Author: Richard Slater Publisher: Public Adminstration and Development Publication year: 2007
