Fiscal Limitations to Government Crisis Response: The Municipal Experience in Responding to Infrastructure Failure
Date
2025-01-27
Authors
Stewart, Veronika
Journal Title
Journal ISSN
Volume Title
Publisher
Local Governance Hub
Abstract
Key messages
• Government response to crises is limited by structural factors, including imperfect economic forecasting, preference for status quo, and short-term political cycles.
• Municipalities face significant financial constraints in crisis management due to limited revenue sources, reliance on regressive property taxes, and restrictions on borrowing.
• Local governments heavily depend on intergovernmental transfers, which can be unreliable and restrictive for crisis prevention and management.
• The infrastructure crisis in Canada, exemplified by Prince Rupert's water system failure, highlights the fiscal limitations of local governments in addressing predictable crises.
• Recommendations to improve municipal crisis response include broadening taxation powers, increasing intergovernmental transfers, and granting more financial flexibility to local governments.
Description
Keywords
Citation
Stewart, Veronika (2025). Fiscal Limitations to Government Crisis Response: The Municipal Experience in Responding to Infrastructure Failure, Local Governance Hub Policy Briefs, No 2, pgs. 1-5.