Examines how to adequately and effectively attend to public sector responsibilities for basic services with limited financial and human resources, particularly in the context of rapid population growth as well as shrinkage. Provides an introductory framework for understanding methods and processes of budgeting, accounting, and financial mobilization in the public sector. Uses case studies and practice exercises to explore revenue strategies via taxation, capital markets. Presents experimental experiences with mechanisms and funds such as land-value capture, global and revolving funds, benefits & cost accounting, as well as private sector participation opportunities.
The purpose of this class is to examine critically the idea of fiscal decentralization and its implications for urban public finance and budgeting in developing countries. We will explore a variety of local revenue sources and their tradeoffs. Using a political economy framework, we will examine the following questions:
1. Given a specific institutional environment, how should central-local fiscal relations and local budgets be structured?
2. How should responsibilities of providing public goods and services be assigned to different levels of government and their impacts on local government budgets?
3. What are the principles of tax assignment and their budgetary implications?
4. What are the local tax and non-tax revenue sources for financing urban public goods? More importantly, what are their trade-offs?
5. Besides taxation, what are the alternative revenue sources of local budgets? What are the pros and cons of debit financing and land-based financing mechanisms?
6. How could local governments in developing countries make the budgetary process participatory and inclusive?