Question

Generally, local governments are facing multiple funding challenges in providing services and programs to its citizens, please identify two of the major issues currently facing most cities/towns and elaborate on the potential budgetary impact.

Answer 1

A Local government is the closest system which governs a citizen based on the place he/she belongs to. It is the lowest form of piblic administration which performs its functions for the citizens within a state or a district.

The souces of revenue for local government are as follows-

• Inter Governmental transfers
• Property taxes
• Sales taxes
• Individual income taxes
• Charges and fees

The expanditure of local govenment -

• Public Welfare
• Education Expenses
• Health Care
• Infrastructure Development
• Police and fire protection services
• Utilities
• etc..

Two of the major issues currently faced most cities/towns and their potential budgetary impact.:

1. Unemployment: The term unemployment can be defined as a situation in which a person, above a specific age, is not able to find a source of being paid. It is one of the major factor which determines the health of an economy. Budgetary impact of unemployment over local governments-

• increase in government spending in order to provide unemployment benefits, medical aids and food assistance to the unemployed citizens.
• insufficient income tax collection compared to the existing population in the locale as an unemployed won't be earning anything in terms of money to be eligible to pay tax to the government.
• lowers the standard of living of citizens which in turn reduces their purchasing power. This reduced purchase power would lead to fall in purchase of goods/services which in turn decreases the amount collected by the local government in the form of sales tax,

2.Rising pollution :  Pollution is the detoriation of evironment with the inappropriate use of resource. It leads to depletion of the key sources of everything existing on this earth which are, air, water and land . Pollution not only has an effect on the balance of environment but it also effects the economy. . Budgetary impact of it over local governments-

• Brings down productiviity which it turn effects the collection of revenue by the local governments
• increased expanditure over health care as pollution leads to more health issues.
• contribute proportion of budget towards saving biodiversity and maintaining cleanliness in the surroundings.