Financial Sustainability of Municipalities and Local Governments in Small-Sized Cities; a Case of Shabestar Municipality

Abstract

Lack of a comprehensive approach to municipalities’ revenue sources in the form of macro-economic system, changes and interventions, self-reliance and self-sufficiency policy enforcement have put financial sector of municipalities in unsustainable situation. Continuing of this situation will have undesirable consequences on cities and urban management. Access to favorable and sustainable revenue sources leads municipalities to play a more active role in urban environment and properly meet the needs of citizens. In this regard, this research intends to analyze Shabestar Municipality’s revenue sources in terms of sustainability measures during 2004-2014. Type of the research is applicable and the method is descriptive-analytic and exploratory. Data collection has been carried out either documentary or field survey by using scoring forms and interviews with Municipality officials. Data analysis has been conducted by using Excel, Shannon Entropy and TOPSIS techniques. The results obtained showed that the trend toward financial independence of municipalities and decentralization of sub-national authorities has had some trouble and now municipalities need financial support from central government to fulfill their obligations. Shabestar Municipality like many other municipalities in Iran depends strongly on low favorable and unsustainable revenue sources such as sale of municipal immovable properties, charges on surplus density, charges on removing parking etc.