How does revenue diversification influence the ability of governments to raise adequate revenues to pay for their service responsibilities and other financial obligations? Is it better to rely on different types of taxes that include elastic sources such as sales and income taxes or on more stable sources such as the property tax? Or should the government consider a more diversified revenue structure that includes non-tax sources such as charges and user fees?

Beyond revenue choices, are there financial management strategies that can help governments maintain sufficient funding for public services? For example, due to the long-term planning involved in the design and construction of public infrastructure projects, planners need reliable long-run forecasts and stable sources of revenue over the project timeline. Can improving forecasting techniques and adopting other budget strategies (such as establishing rainy-day funds, pooling resources across jurisdictions, and securitizing revenue streams, among others) reduce the uncertainty of future funding streams?

Bluestone, Peter, Benedict Jimenez, John Gomez, Kshitiz Shrestha, and Nicholas Warner (2023) Forecasting TSPLOST Revenues in Georgia. Georgia State University, Center for State and Local Finance

Jimenez, Benedict S. and Whitney Afonso (2021) Revisiting the theory of revenue diversification: Insights from an empirical analysis of municipal budgetary solvency. Public Budgeting and Finance. https://doi.org/10.1111/pbaf.12309