Africa’s enormous challenges and equally great potential have led to intense international debate over how best to assist its citizens. According to the United Nations Educational, Scientific and Cultural Organization (2009), the continent contains 33 of the 49 least developed countries in the world. Its population faces pressing needs ranging from basic health care and education to improved governance and strengthened legal systems.

When one looks at fiscally distressed cities, it is easy to conclude that insolvency is simply a product of ineffective management, a lack of financial discipline, or the incompetence or corruption of local government. However, several important countervailing facts are worth considering: fiscal insolvency of municipalities today is often the artifact of bad planning decisions made decades ago; many events that led to local fiscal insolvency, including bad planning decisions, were beyond the control of municipalities; and the delicate dance of matching irregular revenues against unpredictable expenditures challenges even the best-run municipalities.

Many planning decisions that catalyzed the decline of Detroit and other Rust Belt cities were made at higher levels of government. For example, construction of federal interstate highways in the 1950s often ran slipshod over local plans and preferences and greased the skids of urban exodus for families, enterprises, and wealth—motivated by the tax advantages of jumping municipal borders. The city of Detroit lost some 60 percent of its population and much of its industry and commerce between 1950 and 2000, while the population of the metropolitan area remained fairly stable. Tax bases and populations of nearby municipalities grew substantially while Detroit’s evaporated during that half-century.

Similarly, policies at state and federal levels imposed unpredictable and often unmanageable spending requirements on local governments. Over decades, localities were buffeted by revisions in revenue-sharing formulae of higher-level governments or unfunded mandates. The Clean Water Act, for example, established a much-needed regulatory framework that has cleaned up waterways and protected citizen health since 1972. It also imposed draconian financial demands on local governments, saddling them with the costs of expensive water systems upgrades to meet ever more stringent standards, and the seemingly impossible challenge of separating storm water and wastewater in commingled underground systems built a century ago.

As municipalities internalize the message that poor financial performance is a local problem, they often take remedial actions that inflict more serious damage on their economic and social futures. One of the underreported aspects of the unfolding tragedy in Ferguson, Missouri, is the extent to which the violence and recrimination there is rooted in fiscal challenges. Ferguson, like many jurisdictions in St. Louis County, chose to supplement insufficient local revenues with traffic fines that were harshly enforced. Many similar jurisdictions derived 30 percent or more of their general revenues from enforcement of traffic violations. It is best left to the courts and the Justice Department to determine whether the pattern and practice of enforcement in Ferguson was discriminatory. But there is a separate issue involving the conflation of public safety and revenue generation, which can lead to perverse outcomes.

St. Louis County is not unique in its creative use of local courts as a revenue generator; it is pattern and practice in municipalities across the United States and other continents. In a 2006 study of North Carolina counties by the St. Louis Federal Reserve Bank, humorously named Red Ink in the Rear View, the authors found that a 10 percent decrease in annual revenues led to a 6.4 percent increase in traffic citations. Interestingly, there was no reversion to fewer citations when revenues rose. In one astounding case, the town of Waldo, Florida, derived half of its general revenues from traffic fines. New York City netted $624 million in general revenues in 2008 using aggressively priced and enforced parking violations. On the international front, the BBC and The Guardian accused London’s Hammersmith and Fulham Council of using traffic courts as a major revenue source in 2013.

Another dangerous way that municipalities shore up finances is through the sale of tax liens to investors. Although this practice attracts needed revenue, conveying powerful tax liens leads to unintended consequences that are difficult to manage. The dominance of tax liens over all other liens gives extraordinary power to those exercising foreclosure. Savvy investors who pay a small share of outstanding arrearages to purchase liens can acquire properties at pennies on the dollar of actual value. These new owners manage their holdings to maximize return, which often runs counter to public interest when it promotes naked speculation on vacated properties or accelerated neighborhood decline through widespread absentee ownership.

Municipalities make desperate choices like these to improve fiscal status in part because of popular opposition to property taxes, the dominant source of local revenue. Any municipality that considers raising property taxes to cover obligations faces the prospect of local tax revolts or increased pressure to relieve residents and businesses of tax burdens. In this issue, Adam Langley analyzes the property tax credits and homestead exemptions that provide individual relief from this unpopular tax, but further constrict local public budgets (p. 24). Constraints imposed by property tax limitations often lead to more reckless measures to make ends meet.

Perhaps there are other approaches available to municipalities to restore fiscal health. In Detroit, an unprecedented partnership among the public, private, and civic sectors supported a participatory planning exercise called Detroit Future City. More than 100,000 residents contributed to the design of this extraordinary land use and economic redevelopment strategy. John Gallagher reports on early implementation of projects that are intended to bring this community vision to reality in the Motor City and turn around decades of decline (p. 14).

Municipalities in developing countries confront a different set of fiscal challenges. In many countries, as national governments devolve responsibility for supplying public goods and services to localities, municipalities must invent new local public finance systems; most see property taxation as a promising revenue option. However, effective property tax systems are built on foundations such as land registries and value assessment tools. The difficulty of building these systems is magnified in cities with expansive informal settlements, where residents and their homesteads are not officially registered or recognized. Ryan Dubé reports on some of the challenges of establishing and maintaining a property registration system in Lima, Peru, where an upgraded system has not delivered on hypothetical benefits proposed by theorists (p. 6).

The challenges of attaining and sustaining municipal fiscal health are manifold and complex but not insuperable. During the 1960s and 1970s, today’s hottest American urban economies also struggled with population flight, urban blight, and insurmountable fiscal challenges: the cities in or near bankruptcy then were Boston; New York; Washington, DC; Seattle; and San Francisco. Their renaissance might have had less to do with their intrinsic greatness than the work of larger forces at higher levels of geography. This is not to cast aspersions on our great coastal cities; it is simply to make the larger point that municipal insolvency is a structural problem, not necessarily a product of any particular deficiency in local leadership.

Sound planning and effective public management lay at the heart of municipal fiscal health. A sound fiscal stance is required to finance public investment in projects that build a prosperous and sustainable local economy. A robust local economy grows a tax base that throws off revenues, which local governments need to pay for the public goods and services that support a good quality of life. But chronic and unpredictable variability of both local revenues and expenditures requires effective planning to survive inevitable bumps in the road.

In October, I named redevelopment—the effective reuse of previously developed land—a millennial challenge. Managing and sustaining the fiscal health of local governments is another such challenge. We need a better understanding of the theory and practice of planning, taxation, and valuation that can guide municipalities’ efforts to pursue this elusive goal. The Lincoln Institute of Land Policy is uniquely poised to inform such efforts. In this issue, we’ve touched on a few topics that relate to municipal fiscal health; this millennial challenge will remain a major focus of our work here at the Institute.

An informed citizenry is an empowered one, but educating taxpayers and voters can be difficult. While most people care deeply about various community issues—such as whether to build a new library branch or provide curbside recycling—very few of us spend our limited free time paging through spreadsheets to understand the specifics of a municipal budget and the likely implications of a funding decision. This disconnect is unfortunate, because buried in those reams of data is the story of our individual communities—a map of the ways in which a single decision impacts the quality and availability of the public services we rely on in our daily lives, such as road maintenance, public education, and emergency services.

“To be fiscally strong, local governments have to be in a dialogue with residents,” says Lourdes Germán, an expert on municipal fiscal health and a fellow at the Lincoln Institute of Land Policy. “Residents have to know what key decisions are facing town officials, what those decisions mean financially, and how tax dollars are being used. All sorts of important things are up for a vote by the residents at town meetings, and often that meeting is the first time people hear about the issues, which is too late.”

Annie LaCourt agrees. A former selectman for the Town of Arlington, Massachusetts, LaCourt came up with the idea to convert the piles of spreadsheets that constitute Arlington’s municipal budget into a simple visual that could be understood by all community members, including those lacking any previous knowledge of the budgeting process.

“For Arlington, we do a five-year projection of our budget and have lots of discussions with the public around what those projections mean and how they relate to our taxes,” explains LaCourt. “I wanted to make that conversation more public, more open, and more transparent for people who want to know what’s going on.”

Specifically, she envisioned an interactive website where residents could input their individual tax bill and receive a straightforward, graphical breakdown of how the town spent the funds. She hoped that providing taxpayers with more accessible, digestible information would encourage them to engage more fully in the critical, if seemingly esoteric, decisions that go into crafting a municipal budget. LaCourt enlisted Alan Jones, Arlington’s finance committee vice-chair, and Involution Studios, a design firm that donated its services to the project. And in September 2013 the Arlington Visual Budget (arlingtonvisualbudget.org) was born.

“The Arlington Visual Budget enables taxpayers to think about the budget on a scale that is more helpful to them,” says LaCourt. “Instead of trying to understand millions of dollars’ worth of budget items, a taxpayer can look at the costs to her, individually, for specific, itemized public services. In Arlington, for example, we spent $2 million on snow removal last year, which is the most we’ve ever paid. Using the website, the resident with a $6,000 tax bill will see that he personally paid $90 for those services, which is a bargain. When you see your tax bill broken down by services, and you see that your share of the total cost for all these services is relatively low, it starts to look pretty reasonable.”

Adds Jones, “It also shows people that their taxes are going to things they don’t necessarily think about—things that people don’t see driving down the street every day but are important parts of the budget—like debt service on school buildings built 10 years ago, pension and insurance payments for retirees, or health insurance for current employees.”

Another benefit of the website is that it makes it easier to see how public policy has evolved over time. “The Arlington Visual Budget has data going back to 2008 and projections out to 2021, so citizens can really understand how the budget has changed and how that impacts them,” says Adam Langley, senior research analyst at the Lincoln Institute of Land Policy. “Taxpayers can see that state aid for general governments was cut in half from 2009 to 2010, and that it hasn’t recovered at all since then. Because of that cut, the share of Arlington’s budget funded by state aid has fallen, while the share covered by property taxes has grown from 70 percent to 76 percent. The impact of government decisions on household budgets becomes clearer.”

Brendhan Zubricki, the town administrator for Essex—a community of approximately 3,500 people roughly 26 miles north of Boston—quickly understood how the interactive budgeting tool could help local residents make an important financial decision in real time. For the past hundred years, the town has leased to private leaseholders a parcel of publicly owned seaside property known as Conomo Point. Essex relies on the approximately $500,000 in annual property taxes collected on the land to help cover its $6.4 million tax-funded budget, which doesn’t include the $7.4 million it pays to participate in two regional school districts. In May 2015, Essex taxpayers asked to vote on whether to continue leasing the land with improved public access to the prime strip of waterfront or take over the whole parcel for public use. Should residents vote in favor of a park, the land would no longer be taxable, at which point they would experience a tax increase to cover the $500,000 in lost revenue.

Zubricki turned to the visual budgeting tool to model the various tax scenarios at a town meeting that was called in advance of the vote. “The basic model was a visualization tool to help the average person understand the budget. But we took it a step further and used it to explain Essex’s financial future as it related to this one major item. It worked well. We got a lot of positive feedback from meeting attendees,” says Zubricki. Months later, in a nonbinding vote, residents overwhelmingly opted to continue leasing the land at Conomo Point and explore ways to improve access to existing waterfront parks and other public spaces (the binding vote will take place in May 2016).

In keeping with the principles of the civic technology movement—“open data, open source”—LaCourt, Jones, and the team at Involution Studios made the visual budgeting tool available to the public at no cost. Doing so enabled local government officials to repurpose the tool, free of charge, for their respective municipalities simply by incorporating their community’s budgeting data, all of which is publicly available.

“By making the software open source, Annie and Alan are really helping smaller municipalities that can’t afford a chief technology officer or a developer or a design firm, and have to balance competing concerns like whether to fund a school program or build a website,” says Germán. “These communities can use the tool by just plugging in their own data.”

Germán goes on to say that the software also helps local officials to plan better for the future. “Visual Budget enables public officials to model multiyear scenarios. Multiyear forecasting and planning is critical for fiscal health and stability, but is not necessarily available to small towns.” The site has won numerous awards, including the 2014 Innovation Award from the Massachusetts Municipal Association.

Earlier this year, LaCourt, Jones, and the Involutions Studios formed Visual Government (visgov.com) in response to growing interest in the software. Visual Government “continues the commitment to make meaningful budget presentations affordable for municipalities and civic groups of all sizes.” While the software remains available for free, Visual Government also offers a consulting package, which includes building and hosting a website, and assisting the municipality to compile past, present, and future budget data. Determined to remain affordable, the package costs $3,000 and is designed primarily for communities that lack the staff to create their own website.

“The visual budget websites aren’t high-volume sites,” says Jones. “But they are high-value sites. They show the consequences of financial decisions in a way that feels more evidence-based, and less anecdotal. We always refer to them as the ‘No Spin Zones.’”

Loren Berlin is a writer and communications consultant based in Greater Chicago.