Local Public Finance and Economics by Harry Kitchen & Melville McMillan & Anwar Shah

Author:Harry Kitchen & Melville McMillan & Anwar Shah
Language: eng
Format: epub
ISBN: 9783030219864
Publisher: Springer International Publishing

Summary

Growing concern over the state of local government infrastructure in both developing and developed countries has highlighted the importance of capital expenditures and the way in which they are financed. As municipalities expand and grow older, resources must be devoted to the expansion or replacement of their capital stock. Water plants and sewage treatment facilities, cultural and recreational facilities, transportation, and communication facilities—all must be updated and expanded. Brownfield remediation must be addressed, and “blighted” areas of cities revitalized and redeveloped. Capital spending on these facilities, however, should not be initiated by a local or municipal council until it has carefully and thoroughly articulated a multi-year capital budget that lays out current and future capital expenditure requirements and the way in which these expenditures are to be financed.

Infrastructure funds may be drawn from a variety of internal sources including operating revenues (local taxes and user fees), earmarked taxes, reserves, special charges consisting of specific assessments, development charges, and other exactions made up of value capture levies, density bonusing, linkage fees, and parkland dedication. External capital funding may come from tax incremental financing, grants, long-term borrowing in the form of general obligation bonds, revenue bonds, tax-exempt bonds, and public-private partnerships.

Evaluation of these instruments has been completed by reference to the benefits received model of public finance. Whenever a direct link is made between the users of a service and its funding, one observes a more efficient use of resources, better accountability, increased transparency, and improved fairness. The choice of financing instrument and the way it is employed has an impact on both the level of services provided by infrastructure and the size and range of the infrastructure itself. Incorrect or inadequate prices (user fees) and taxes result in a use of services that is far from efficient or optimal and, subsequently, a level of infrastructure that is too large or too small.

As for the range of financing instruments, operating revenues are appropriate for assets that are short lived; special property charges or exactions are useful for assets that benefit specific areas of a municipality; reserves are often used but they generally violate the principle of intergenerational equity because current users and taxpayers pay for capital expenditures that will be used by future generations; development charges with variable rates are good for growth-related infrastructure; tax incremental financing can assist in the remediation of brownfields and blighted areas; borrowing is preferred for infrastructure that benefits future generations; grants may have merit for local infrastructure that generates positive externalities and for projects in which the donor government has an interest; and public-private partnerships may be preferred for large infrastructure projects.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.