Financial Health of Cities is Connected to that of Residents
On Feb 9, the Urban Institute hosted a panel highlighting the interdependence of household financial security and city budgets. Researchers have found that even a small amount of savings dramatically reduces the likelihood of costly remedial support services and can improve income for local governments.
The panelists point out that cities and mayors, with their convening power, are “uniquely positioned” to interrupt the cycle of poverty. On the preventative side, zoning and licensing can be tools to reduce predatory payday lending. In addition, municipalities can limit court fees that often create an economic spiral for low-income people.
The National League of Cities has had some success with early identification and intervention for at-risk households by using data from unpaid utility bills to target residents for supportive services, such as tax assistance incentivized savings programs and financial coaching.
The panelists emphasize that it is important to define roles and desired outcomes to move beyond conversation toward action. Imbedding and integrating the program across city agencies can help it survive a change in administration. They advise starting at a neighborhood level, with private money to build evidence that encourages investment of public funds. Early inclusion of partners is essential since there is often “historic trauma” that must be overcome in order to build community trust between local governments and residents.
Benefits to cities include improved tax base, more timely payment of public utilities and the prevention of costly support services. Other widely shared benefits include increased rate of homeownership and entrepreneurship, which improve the local economy and stabilize communities.