In 2009, the World Bank engaged ICMA to provide recommendations to Lebanon’s Ministry of Interior and Municipalities that would create a roadmap to strengthen and modernize the municipal finance system.

Issues to be addressed included the lack of transparency and efficacy of the intergovernmental finance system and the inability of the municipalities to raise revenues, which jointly restricted the effectiveness of local entities. Since the municipalities had few revenue sources of their own, the unpredictability and insufficiency of the funds flowing from the national to the local level prevented them from meeting the expressed interests and needs of their constituents.

The Lebanon Municipal Finance Studies Project, carried out from January 2010 to February 2011, developed studies that focused on three key subject areas: (1) strengthening the municipal finance framework; (2) assessing the independent municipal fund; and (3) property tax modernization. The project team, which included ICMA consultants and pro bono advisors, convened a “virtual advisory panel” that met using GoToMeeting to review document drafts and make recommendations.

The project team included ICMA members John Pazour, former city manager in Colorado and Virginia; George Liyeos, city administrator, Rock Hill, Missouri; and Arne Croce, former city manager in California. The ICMA consultants and pro bono advisors undertook the studies and made recommendations for achieving the following:

• Increase the transparency, efficiency, and accountability of municipal financial operations through sound budgeting, accounting, and financial management systems
• Increase the predictability, reliability, equitability, and timeliness of revenue transfers from the national to the local level
• Increase the financial autonomy of municipalities by improving their ability to raise revenue at the local level through property taxation.

The recommendations were based on four guiding principles:

• The responsibilities assigned to municipal government should align with the assigned resources.
• The municipal finance function should be professionalized to the maximum extent possible.
• Municipal finance operations should be conducted in an economical and cost-effective manner.
• The financing of municipal government should contribute to local economic development. 

After the completion of the project, the Lebanese prime minister established a decentralization committee tasked to draft a decentralization law. The current draft of this law in the making incorporates many of the recommendations of the three studies. Time will tell whether they become law, but the work of the participants in the study has proven influential in efforts to make decentralization work in Lebanon.

To learn more, visit the ICMA International website, the Lebanon page, the International Development topic area in the Knowledge Network, and the International Dispatches and Notes from CityLinks blogs, or e-mail international@icma.org.