Rethinking Revenue

Rethinking Revenue

Local government revenues have not remained aligned with modern economic realities. GFOA and a group of partners contend that the time is now for rethinking revenue systems.

Local government revenues are crucial for funding public services like schools, roads, first responders and so many others that citizens depend on. Doing this with efficiency and fairness has always been a challenge, but today local revenue structures are largely based on assumptions that no longer hold true as digitization, globalization, demography, political changes, and other trends continue to shift the landscape. Meanwhile, fairness is becoming an increasingly important concern for public finance and the ways in which revenues are raised.

The Rethinking Revenue project takes a fresh look at how these public funds are raised, focusing on innovative ideas for retooling local systems to align with modern economic realities and treat citizens more fairly. The project involves a series of studies highlighting ideas and guidance to help state and local policy makers think through modernizing outmoded revenue systems.

Rethinking Revenue will provide local governments with tools to help them raise enough revenue for the services their communities need, and to raise that revenue fairly, in ways that are consistent with community values.

Local government revenues that aren't aligned with modern economic realities contribute to distortions in the economy and unfairness in the ways that taxpayers are treated. For example:

  • Property Tax: A large part of the value created in the modern economy involves things less tangible than property, like financial instruments, or bits and bytes.
  • Sales Tax: Only recently, have sales taxes been applied to online sales. While this has helped keep the sales tax somewhat more relevant, consumers have been shifting more of their purchases to services over the years, which tend to be exempt from sales tax.
  • Fines and Fees: Many local governments have become more reliant on fines and fees which are appropriate in many cases because the person who benefits from the service pays for it. However, overuse can lead to unfair and counterproductive outcomes for citizens. View GFOA research on fines and fees.

How Will Rethinking Revenue Approach This Challenge?

We will approach it the same way one would any long journey - one step at a time. We've put together five steps to get the process started.

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Rethinking Revenue Reports

View reports that highlight ideas and guidance to help state and local policy makers think through modernizing outmoded revenue systems. The objective is to provide local governments with tools to help them raise enough revenue for the services their communities need, and to raise that revenue fairly, in ways that are consistent with community values.

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Working Behind the Scenes

We're Rethinking Revenue as a team. Learn more about the individuals working on this project with us.

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Research Partners

Additional Resources

Imposed Fee and Fine Use by Local Governments

GFOA has released a new research report that provides tools for local government finance officers to use in evaluating their own existing policies, along with guidance and policy templates for drafting new policies.

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GFOA Research: Property Tax Disrupted

Property tax is the largest and probably least popular local government revenue source and adapting it to modern realities will not be easy. The solution might involve both updating the property tax itself and finding new revenues that are better aligned with the sources of economic value in today’s world.

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Local Government Revenue

While most local governments rely on common revenue sources - property tax, sales tax, intergovernmental assistance, utility charges - the specific sources for any one city can vary significantly. GFOA has prepared this interactive dashboard to help promote a better understanding of city and county government revenue sources.

Rethinking Budgeting

Rethinking Local Government Budgeting for 2020 and Beyond

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