Recovery, Renewal, Resilience

Cities’ have been in the forefront of the fight against the pandemic, by providing emergency services, containing the spread of disease, mitigating the resulting social and economic impact, and coordinating efforts for recovery. In addition, cities have delivered financial aid to companies and families in need, and reduced or suspended municipal taxes (see European Committee of the Regions). Naturally, this has impacted their public finances and there have been various calls to change how cities are funded, in order to increase fiscal resilience. The current funding model for most cities, around the world, is primarily based in transfers from national governments. Own revenues, such as taxes, comprise the second most important source of revenue to cities, followed by external financing. The UN proposes reversing the current model, by decreasing the dependency on national transfers and increasing revenues from own revenues and external financing. The UN recommends the following:

• Provide funding to cities to support economic recovery, for example:
  • National governments could provide emergency funding to cities earmarked for service provision, infrastructure, and special relief programs for populations
• Improve the accessibility of finance and credit for local governments, by allowing them direct access to grant/loan applications and enabling them to develop public private partnerships
• “Strengthen multilateral financing and cooperation” to allow cities to fund recovery and renewal programs. For example:
  • International organizations, development banks, and national governments could establish dedicated global funds to finance urban responses to COVID-19, to help cities and their local economic and financial recoveries
  • The European Union Solidarity Fund will cover 100% of costs incurred by Portuguese cities, associated with the fight against COVID-19
• Channel financial support to productive sectors most at need. City authorities could facilitate coordinated action across urban areas to provide “loan programmes, grants, tax incentives, and temporary rent deferrals” to businesses in need
• Introduce incentives for “sustainable production and consumption through new policies, subsidies and knowledge transfers”. E.g. grants for new clean energy strategies such as green roofs
• “Address dysfunctional and exploitative development practices such as land speculation and unserviceable sprawl”, by, for example, implementing and enforcing clear regulations and introducing taxes to increase own revenues