Technology and local governments

Much is being written about self driven cars, electric cars and how transportation will look like in the not so distant future. I was reading an article on how large cities are slowly moving toward self driven cars and the impact it will have on the use of private cars. Assuming that such a transportation model is acceptable and becomes a reality in urban settings, I was struck by the impact it will have on government finance. Transportation departments rely on parking fees for a good portion of their budget and having auto driven cars replacing private cars would mean a fall in parking revenues. Based on a recent study, the largest 25 cities in U.S. collected approximately $5 billion in transportation related revenues including gas tax, traffic citations and parking fees. For example, the city of Chicago anticipates a 10-15 percent fall in revenue once the self-driven cars become an acceptable mode of transport in their metropolitan area. Combined with the push to have more electric cars on the road which translates into lower levels of gas tax, the future certainly could put a dent in the revenue stream cities receive from the transportation sector.

Recently I was conducting a financial management workshop for local government officials when we got into a great discussion on how technology is helping propel local governments to deliver more effective services. It is allowing for much closer interaction between government and people at the local level thereby improving customer access to quick information and oftentimes reducing the cost of delivering host of services. While technology is a broad term, for local governments it involves both hardware and software as well as technology adoption by its constituents or residents. and its use depending on the type of service. For example, with the use of more automated machines allowing patrons to borrow, renew, pay fines, and a host of other services, public libraries in many places are able to provide services with much lower costs, thereby offering similar services at a lower cost or more/better services for the same cost. In this example, cost savings could translate into other resources that libraries may provide to it patrons.

However, related to all of these, a new issue is slowly evolving that is proving to be a cause of concern for local governments. With growing use of technology, it is leading to decline in revenues for local governments that have been a reliable source for a long time. With more energy efficient appliances, self-driven cars, higher mileage per gallon of gas, electric cars, consumers are having to pay less to the providers of the services, usually city or county governments. While it is still unknown how the future will eventually look like, it goes without saying that technology is both a boon and could become a bane for local governments across the nation.

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