Abstract
The multi-faceted problem of local government finance has attracted increasing attention in the new millennium. The reasons for the renewed interest in this thorny question are comparatively straightforward. In the first place, for the past two decades all public sector institutions have been profoundly affected by the twin revolutions simultaneously sweeping the world – the globalization of the international economy and the information revolution wrought by the computer age – and local government is no exception. Not only have these inexorable forces had dramatic implications for the structure of government as a whole, and relationships between the different tiers of government, but also for service provision and public finance, including local public finance. Secondly, substantially heightened demands on local government, together with limited access to adequate funding, have seen the genesis of a deepening crisis in the financial sustainability of local government entities.
Highlights
The multi-faceted problem of local government finance has attracted increasing attention in the new millennium
Concluding Remarks In this review note, we have considered the literature on local government finance, placed Financing Local Government in this context, and demonstrated that the problem of defining financial sustainability in local government is unresolved and the application of this concept to local authorities in the form of various financial indicators is flawed
We have argued that the literature on local government finance is deficient in the sense that it often ignores this problem
Summary
The multi-faceted problem of local government finance has attracted increasing attention in the new millennium. The main consequence of the failure of national governments to decentralise fiscal capacity has been the development of a crisis in financial sustainability in many local government systems, especially rural municipalities.
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