Align revenue sources with the city’s sources of wealth

Correcting for fiscal imbalances may help cities improve the alignment between revenue sources and their sources of wealth (e.g., consumer spending, property values, etc…). This includes understanding the city's fiscal policy space, fiscal capacity, and adaptability.

Leaders should look into creating an optimal revenue mix based on city wealth. This means looking into the tax base, tax policy, fees, intergovernmental transfers, and other sources of revenue and wealth.

ASSESSMENT

Some questions to guide your thinking

What are the city's sources of wealth (e.g., consumer spending, property values)?
How well are revenue policies capturing the city's wealth?
What authority does the city have to shift revenue policy?

Reading

Understanding the city's fiscal policy space

Brookings Institute 30 minutes

What are the constraints on local governments to enact fiscal policy, and what is their capacity? This paper argues that different cities have different levels of capacities and constraints, and introduces a framework for understanding your fiscal policy space.

Constraints for cities include the state-local regulatory system, tax and expenditure restrictions, and limited state aid.
Alignment between the city's tax revenue and its economic base can contribute to long-term resilience.
See page 26 for a sample of where major US cities fall in the framework.

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Podcast

Planning a fiscally sustainable Capital Improvement Plan (CIP)

Engaging Local Government Leaders (ELGL) 50 min

In this podcast, Kevin Shepherd and AJ Fawver of Verdunity talk about their organization’s mission, how cities can build better places, and the cost of maintaining infrastructure.

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