Coping with Urban Fiscal Stress around the World

The economic recession, the end of
stimulus funding and central government cutbacks, rising
social costs and aging, and the need for infrastructure
upgrading for urbanization are putting enormous fiscal
stress on cities. The financing capacity of municipalities
is greatly affected because of the decline in the tax base,
expenditure pressures, and growing and more expensive debt.
Today's urban fiscal crisis is similar to that
experienced in the 1970s, but the growing urbanization in
the world and massive increase in municipal access to
financial markets create a new context. This paper surveys
three important topics related to the urban fiscal crisis in
developed and developing countries: How do cities finance
themselves? When they have access to financial markets,
should city managers use loans, own revenues or
private-public partnerships to pay for municipal
expenditures? And what are the remedies to municipal fiscal
crises in case of insolvency?