Problem
Inadequate local government financing
Other Names:
Excessive reliance of local governments on grantsInadequate funding for local government
Lack of local government credit
Local authority budget crisis
Nature:
Inadequate local government financing is caused and compounded by several factors. Towns tend to be caught in the dilemma that, while central government (due to the worsening economic situation or to ideological reasons) is unable or unwilling to fulfil its obligations, there is also reduction of their own revenues, caused by the exodus from the inner city. Taxpayers who leave tend to be relatively more prosperous than those who stay, so that government yield of local taxes decreases while an increasing percentage of expenditure goes to the support of the needy inhabitants who remain in the city.
Excessive reliance by local government on grants, or on unexpected increases in them, can result in poor use of public finances. Grants can encourage recipients to be less efficient and can decrease the fiscal autonomy of local regions.
Broader Problems:
Lack of fundingInadequate city governanceInsufficient operating capitalDecline in government expenditureLack of funding for infrastructureDiminishing capital investment in small communities Narrower Problems:
Undiversified tax baseUnbudgeted child educationInsufficient utility revenueFailure of public authorities to assist in financial investment Aggravates:
Economic dependenceDeficient social planningDependency on local authoritiesInsufficient public land upkeepUnethical practices in local governmentInsufficient means for community initiativeHostilities between central and local governmentsUnstructured local government in small communitiesDelusions over responsibility for community improvements Reduced By:
Prejudicial community self-relianceStrategies:
Promoting best value in local authoritiesSecuring government subsidiesRelying on grantsFinancing local governmentImproving financing by local government Subject(s):
Commerce → CreditCommerce → Finance
Government → Government
Government → Municipalities
Societal Problems → Emergencies
Societal Problems → Inadequacy
Societal Problems → Scarcity
Society → Local
Related UN Sustainable Development Goals:
Problem Type:
D: Detailed problems Date of last update
04.10.2020 – 22:48 CEST