Municipal Governments
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Industry Overview
In the US, about 36,000 municipal and township governments have combined annual revenues of $375 billion. The form of municipal government varies widely. Most larger cities have an executive system managed by a mayor or city manager. Many smaller municipalities, especially in the eastern part of the country, are managed by a town board system overseen by a board of selectmen. Some towns in New England still decide many issues by town meetings. Municipal revenue per capita varies widely among cities, from less than $1,000 in El Paso to more than $7,000 in New York City; the national average is slightly above $2,000.
Competitive Landscape
The demand for municipal services is driven by population growth and demographics of the local population. Because municipalities must operate with a balanced budget, loss of revenue results in loss of services, usually through job cuts. Municipal government is highly labor-intensive: average annual revenue per employee is about $80,000.
Products, Operations & Technology
Municipal governments provide operating services to residents, formulate and enforce local laws, make infrastructure capital improvements, and provide local planning. The services municipalities provide depend partly on the size of the town or city, but some are basic: a school system, police and fire protection, street and highway maintenance, water and sewer services, waste management, and various social services. Additional services can include municipal courts, jails, hospitals, housing, parks, libraries, colleges, public transportation, parking, conservation, airports, electricity, gas, and health and welfare services.
Education is the largest item in most municipal budgets, on average accounting for 45 percent of all local spending. In large cities that provide a wide range of services, the percentage spent on education is generally lower than in suburban communities. Many cities don't have direct budget control over education spending on local schools, which is separately administered by independent school districts. Police and fire protection account for about 15 percent of municipal costs. Utilities (including water, sewer, electricity and gas) and public works (waste management, street and highway maintenance) account for about 25 percent.