I first became interested in cities when trying to understand the interplay between urban sprawl, healthy communities and the productivity of agricultural and land-based economic activity, in the US context as I watched urban sprawl occur in the community where I grew up. As a general thought, while urban sprawl can be managed to foster positive benefits to economies, communities and regions, in many cases across the US, it has resulted in straining infrastructure and service delivery of core cities, including reducing tax bases, in some cases resulting in financial instability. Speaking with numerous local government officials across the country, I’ve noted that working towards financial stability is no easy task for local government managers. In many communities across the country, we’ve seen the Great Recession of the last several years initiate and exacerbate economic and demographic changes to communities in many places around the United States, including a number of states in the Upper Midwest. While some local governments have demonstrated resiliency, others have not.

In a number of these local jurisdictions, population demographics have shown either shrinking populations, as unskilled manufacturing jobs have disappeared, and/or a poorer population in these communities. Some municipalities, school districts, counties and townships have buckled under the weight of these enormous changes, filing for bankruptcy or receiving emergency intervention from state government in attempts to prevent bankruptcy. Others have had to reduce both the quantity and quality of services they provide to residents. However, like numbers of displaced workers across the US, many local governments have consciously reassessed, rethought and retooled themselves for a changing era, to ensure financial and political stability. One that comes to mind is that of Lansing, Michigan, which in 2014 has moved towards a balanced spending plan for the first time in nearly a decade, thanks to efforts that contain health care costs and establish priorities on city spending. To read more about what Lansing is doing to work towards financial stability, visit their city’s website at www.lansingmi.gov .

Local governments in developing countries often face greater challenges than their US counterparts in terms of capacity. They, like communities in the US, understand that financial stability is a critical aspect to not only delivering good quality services to their residents, but ensuring financial stability is important so that those services can also be continually improved and expanded upon. USAID and ICMA have been involved in assisting communities across the world with strengthening municipal budgeting ability. As a part of the Regional Afghan Municipalities Program for Urban Populations (RAMP UP)-North, implemented by Development Alternatives , Inc. (DAI), ICMA assisted the city of Mazar-e-Sharif in northern Afghanistan with establishing basic municipal budgeting techniques, conducting financial analysis, inventorying assets and collecting revenue through mandated activities such a business licensing. Accordingly, the city of Mazar-e-Sharif has experienced a more robust financial status from when the RAMP UP project began through its conclusion in early 2014, and Mazar-e-Sharif is increasingly recognized as one of the most stable places in Afghanistan.

A citizen from Mazar-e-Sharif’s District 10 addresses the Mayor during the question and answer session at the public municipal budget meeting on March 31, 2012.

In many developing nations, financial stability for local governments can come about by focusing on (1) strengthening the municipal finance framework; (2) property tax modernization; and (3) assessing the Independent Municipal Fund. Towards this end, municipalities may consider establishing or improving the following initiatives:

• Municipal budgeting and accounting systems (including performance-based budgeting;
• Financial management and reporting procedures;
• Personnel management systems;
• Property tax assessment methodologies;
• Property tax billing, collection, and monitoring systems;
• Improved municipal real property management;
• IT system development and expertise in hardware/software specification in support of all of the foregoing areas.

In Ethiopia, ICMA collaborated with donors and partners to assist the municipality of Gambella with revenue collection through the reuse of public facilities. Employing a community planning process that engaged members of the general public, local government officials, youth organizations, representatives from women’s groups and small business people, local government renovated facilities that were sitting vacant and transformed them in to a retail space and a cybercafé, which were rented out to members of the private sector, resulting in the creation of jobs and additional revenue for local government.

A community planning process in Gambella to determine reuse Of underutilized public facilities

Additional support to sub-national government in Ethiopia included assisting the Somali Regional State and the Bureau of Finance and Economic Development (BoFED) with designing a five-year Strategic Plan that developing a “road map” of key development indicators and/or objectives. Following the establishment of the Strategic Plan and development indicators, a performance monitoring framework and computerized database was set up to track accomplishments. The major benefit of the performance monitoring framework is that BoFED adopted the new monitoring policy framework in to their annual planning, budgeting, reporting and release of funds, in consultation with decision makers. For the first time in the region, program results began to be used systematically in the sizing of budget allocation requests for subsequent program years.

The city of Gambella located near the border of South Sudan and Somali are traditionally areas that have experienced varying levels instability. These initiatives undertaken by sub-national government, the communities’ members, USAID, ICMA and others have helped contribute to financial and political stabilization in those places.

In many of the countries where ICMA works around the world, local government services are  not always presently commercially viable. This often means that in order to work towards financial stability in the long run, a mix of financial resources from national governments, international donors, tariffs and/or general revenues can contribute in a positive way towards leveraging longer-term private investment, which, in turn, is an important fundamental of the economic and fiscal health of any community.