Progressive Local Government for the 21st Century

Revenue

The Problems & Progressive Local Solutions

Progressive reform requires funding. Every officeholder must deal with budgets and revenue streams, and sufficient sources of revenue are critical to realizing the progressive agenda. Some significant untapped revenue streams exist that could facilitate programs such as equitable housing or fully funded public schools.

Available Local Levers & Targets of Reforms

Several revenue streams are widely underutilized. Recreational marijuana can generate millions in taxes while providing substantial ancillary benefits such as reduced opioid overdose death rate; similarly, carbon pricing and congestion taxes would simultaneously provide significant new revenue streams while addressing major social problems. Generally, new revenue streams are unpopular due to the associated taxes; in some cases, they may be achieved by increasing efficiencies and reducing waste. For instance, healthcare costs and incarceration costs are so substantial that they impact families’ ability to maintain or increase income and spending; alleviating pressure in these areas would increase the overall available budget of government while expanding total revenue.

Current Reforms & Tools to Fight for Them

There are multiple strategies that can maximize existing revenue streams and creating new sources for raising local revenue, including:

  • Implement tax fees, sales tax, development fees, and other ways to capture capital from investments, including working with states to ensure progressive taxation structures with guaranteed portions devoted to local reinvestment.
  • Incentivizing mixed-use, mixed-income dense developments that offer exponentially more revenue than low-density developments.
  • Create carbon pricing programs that create avenues for reinvestment or directly redistribute some portion of the fund as a dividend.
  • Regulating short-term rentals and gig economy activity.
  • Value capture taxes – revenue streams based on the land value gains due to infrastructure improvements.
  • Working with the state and federal government where appropriate.
  • Municipal cap-and-trade systems in conjunction with other public-private collaborations that create industry clusters and workforce expertise focused on sustainable businesses.
  • Closing LLC loopholes that can deprive states of billions in revenue.
  • Some municipalities, particularly smaller ones where non-profits are highly concentrated, may benefit from Payment In Lieu Of Tax (“PILOT”) programs where the non-profits are willing to engage with the city on targeted projects.
  • Parking pricing programs that mitigate congestion while capitalizing on government-owned property dynamically priced to reflect demand.
  • Ensuring fair labor standards that improve family incomes and therefore total taxable income.
  • Contracting efficiently according to National Employment Law Project standards, which can reduce employee turnover and increase municipal savings.
  • Focusing on public health and social-civil utility programs that ease healthcare costs, improve access to education, housing, jobs, and justice, and facilitate positive social outcomes for families and individuals.

 

Taking it to the Next Level

There are obvious ongoing problems to generating revenue. Taxes are politically unpopular, and the surest form of revenue generation. Developing efficient programs at the local level can maximize available funding impact, and audit programs that evaluate efficacy can broadly improve government efficiency. Challenges to local revenue streams include:

  • Federal or state rollbacks.
  • Developing non-tax mechanisms for revenue generation and dealing with unpopularity of taxes in general.
  • Protecting local initiatives from state or federal interference (see preemption).
  • Demonstrating utility of revenue streams to facilitate future projects.
  • Prioritizing projects that support core infrastructure functions and offer multiple benefits.
  • Creating access to capital for women and minority business owners.
  • Preventing race-to-the-bottom incentive packages that give away revenue streams to corporations.

 

Helpers & Allies

A number of organizations have done critical work in the local municipal revenue generation space. The Center for Popular Democracy, Local Progress, the State Innovation Exchange, the National Employment Law Project, the Center for American Progress, Open Society, labor unions and other advocacy groups have done quality work establishing and proposing revenue streams to improve civic life.