Future Outlook For Local Governments Budgets

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Term Paper Title	Future Outlook For Local Governments Budgets
# of Words	1307
# of Pages (250 words per page double spaced)	5.23

                                     Future outlook for local governments budgets
                                                                  Under
             Current fiscal and political environment at national and state level

It is not easy to predict the future for any thing, especially when it comes to economics. The economists differ in their opinions more widely than any other profession. However the ability of of local governments in any metropolitan area to provide basic public services and interrelations between cluster of cities in the metro area is directly related to the tax policy.
As we enter the 21st. Century, local governments will face challenges to how they raise revenues. Existing local tax system has over the years, developed inherent problems that raise doubts about their ability to meet the future basic needs. None of the major sources of local revenues have significant growth potentials. Indeed some local taxes are likely to decrease in importance. Existing local government tax systems were not designed to function in a service-dominated economy dominated by electronic commerce, mobile capital, or rapidly expanding international trade. The problem with the outdated tax system and future economic challenges will likely lead us into an environment in which local taxation will be limited to an extent unseen in the American history.
There are three significant consequences of these limitations for metropolitan governments. First they effect each other’s ability to fund basic services. Secondly the limitations will effect the relationship between local governments, which will reduce the ability of the local governments to use tax policy as a means of furthering economic development. Finally, limitations will lead local governments to seriously consider an alternative system for collecting revenue—land Value Taxation.
From a political prospective, there are two imperatives for the local governments in any metropolitan area. First, they must provide basic public services to their residents, like police, fire protection, road repairs etc. When basic public services are not provided consistently and adequately, citizens and businesses eventually leave or decide not to locate in a particular jurisdiction. Government leaders also often incur the wrath of voters; a fact not lost on local politicians.
The second imperative is that local governments must offer economic growth and development, even at the expense of neighboring jurisdicti...

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