Search

The identification and allocation of risk has become a leading priority for local authorities with the emergence of Private Finance Initiative (PFI) projects. Local governments are developing more systematic and timely analyses of risks and how they should be handled. The advent of PFI projects has also led councils to a greater understanding of the services they provide. However, local authorities must develop and implement a comprehensive risk management approach, as risk management is at the heart of PFI efforts.

Finance directors of British local councils contend with rising pressure on both revenue and capital resources amidst existing concerns about probity. In dealing with this pressure, many finance officers still do not lose sight of policy goals in pursuing legally sound and properly controlled budgets. This broad view of their job essentially requires a proactive stance to financial strategy and planning and direct involvement in the council's corporate management.

The Oxfordshire county council is reviewing whether to pay its staff using a combination of cash and retail vouchers. The vouchers could be used at local Tesco, Sainsbury or Safeway superstores. The council is seeking ways to curb a potential shortfall of 9 million pounds sterling in its 1998/99 budget. Unison, a local union, has denounced the plan to protect employee benefits.

Local governments in UK are optimizing the use of their vehicle fleets as well as effecting cost-reductions in their vehicle acquisition programs. Environmental-friendly initiatives such as converting vehicle fleets to LPG are given VAT reimbursements. Vehicle leasing programs are being reevaluated since more cost-effective deals may be acquired in finance leases, contract purchase or outright purchase. Government vehicles in the UK are estimated to number as high as 350,000.

Decentralized fiscal policies can lead to crowding out and loss of employment, with price mark-ups and possible mark-ups of wages. This can occur where local labor markets are unionized, and local product markets are characterized by monopolistic competition. Local governments in this case seek to balance budgets and may be affected by constitutional constraints on spending. There is a need for central government intervention for promote coordination between regions.

Gaming is sometimes seen as a way for some local governments and states to increase their revenues at a time of fiscal constraints. Communities should assess a number of factors such as the size of the local market, the impact on local and state revenues, and whether funds come from outside communities or from within them. The issue of whether demand is created or simply satisfied also has to be assessed. A model for the casino gaming market has been set up and it is a useful tool for local decision makers studying this issue.

Cities face increased demands for services, while their ability to deliver services is hampered by fiscal constraints. Municipal enterprises supply a number of benefits to cities but they are separate funds in the municipality. This means that valid comparisons of service provision have to draw on an understanding of the fund transfer mechanisms that are in most common usage, like services in kind. A survey of cities has provided examples to illustrate these fund transfer mechanisms.

The United Kingdom has created the Association of Local Authority Treasurers as a separate body to assure the new Local Government Association of unified information on matters pertaining to local government finance. The new council will represent all council treasurers from counties, metropolitans, districts, London boroughs, and unitary councils. Mike Shaw, finance director of the Gateshead metropolitan borough council, has been appointed as its first president. The new council is comprised of all 456 council treasurers from England and Wales.