Municipal finance and urban governance
In fast-growing cities, large public investments and an enabling authorising environment are needed to improve the quality of life of citizens and provide the conditions for long-term economic growth.
The challenge for many cities is that municipal revenues are insufficient to meet the large and growing needs for public spending. Cross-country experiences and research highlights some key options for addressing these challenges. Urban land value capture, through annual taxes on land and property, for example, offers an ethical and efficient source of revenue — allowing urban land and property values to finance the public investments which make the city more productive.
At the same time, urban policymaking is often hampered by the lack of an adequate authorising environment — a clear structure for decision making. Institutions often have overlapping and unclear mandates over decisions that affect the city, and in many cities existing institutional structures fail to adequately address cross-district urban issues.
Data and research can play an important role in improving the allocation of resources, forecasting future policy needs and evaluating past interventions. However, over-reliance on ‘smart-city’ objectives can also be costly and unnecessary. Data proves to be most effective as a policy tool when it is collected and targeted around specific use cases or priority challenges.
