Local government funding: facing the issues

Designing funding policies to serve all the local and regional councils in New Zealand is challenging. This article looks at some of the issues that arise, and some principles for addressing funding arrangements and for considering whether current local government funding arrangements are suited to the requirements of local governments throughout New Zealand. The need for new sources of revenue for local governments in New Zealand is a topic which is raised in most reviews of local government funding. The larger question is whether the nature, level and mix of current funding sources meets the needs of all the councils, given the diversity of their roles, funding requirements, opportunities and constraints.   Assessing the suitability of funding arrangements requires balanced consideration of the roles and functions to be undertaken; the jurisdictional structure of local government; and the adequacy of the level and mix of revenue sources. These three elements must be able to work well for a diverse range of local and regional councils in New Zealand. The diversity of issues, opportunities and challenges for New Zealand councils necessitates policy settings that recognise and cater for the whole range of communities and regions in New Zealand. Designing funding policies should involve consideration of the potential role of new sources of revenue, and of the principles that should guide the design of a robust and suitable funding system. &nbsp