THE IMPACT OF SMART TECHNOLOGIES ON THE MUNICIPAL BUDGET

New Funding Tools – 18/02/2016

THE IMPACT OF SMART TECHNOLOGIES ON THE MUNICIPAL BUDGET The Uraia Platform FMDV & UN-Habitat

The Uraia Platform: FMDV and UN-Habitat project ďƒ˜ FMDV (Global Fund for Cities Development) : An international network of cities specialized on municipal finances. ďƒ˜ The Uraia Platform: gathers local governments from around the world to foster the exchange of experience on how cities are using smart technologies to improve municipal finances, services efficiency, transparency and participation.

The impact of smart technologies on the municipal budget ďƒ˜ Cities: under pressure to offer services of quality to their citizens with budgetary restraints => must find innovative sources of revenues and rationalize their expenditures. ďƒ˜ Smart technologies: offer huge opportunities to improve municipal finances either by increasing revenue or reducing expenses.

Smart City Solutions to Increase Revenue Composition of municipal revenue: transfer from central government; tax collection and loans.

Smart technologies can assist local governments to increase endogenous funding: 1. Improve tax collection performance; 2. Facilitate payments; 3. Build trust with citizens.

Improved tax recovery performance: Data analysis to fight fraud Where: Cook County (USA), 5 million inhabitants The problem: important frauds in tax property collection (because of the auto-declaration of exemptions ex. senior) The solution: cross-check property tax records with public databases (including death record) The result: the county uncovered USD 10 million per year lost in fraudulent exemption claims, in less than 2 years it had recovered it.

Improved tax recovery performance: Mapping tools Where: City inhabitants.

of

Sousse,

Tunisia,

250

000

The problem: important decrease in revenue from tax on the use of public space by terraces, cafes, restaurants ‌ The solution: develop a digital map, a geolocalized database (GIS layer), a follow-up program and an application to communication with the retailers.

Results: after 6 months operational, the registered number of terraces had tripled and the municipal revenues had already increased by 20%.

Smart Payments Make it easier for people to pay taxes, fines, licenses, bills, parking tickets, building permits, business licenses, etc. by: - Facilitating access to information - Reminding of deadlines - Digital payment - Two ways: both collection and disbursements

Smart Payments Mobile Money advantages: - Reduce paperwork - Fight fraud, transparency

real-time

control,

increased

- Tackle informality - Foster financial inclusion (between 30 and 50% are banked in Latin America) - Increase tax recovery

Smart Payments Where: Dar-Es Salaam, Tanzania, 3.6 million inhabitants. 6.6% urban growth per year. 70% population informal settlements.

The problem: huge difficulty for collecting taxes, until 2013, everything was done manually, prone to corruption and high administrative costs.

The solution: computerized mapping system of tax payers (GIS); created a software for the database; implemented a real-time monitoring system; and developed the payment methodology through mobile phone.

The result: in one year, the municipality increased its municipal revenue in 300%.

Building trust in local government Increased transparency and citizen engagement in public policies tend to increase compliance of citizens to pay taxes.

Participatory budgeting : Brazil Porto Alegre: since 1989, studies show it has helped reduce tax fraud and increase property taxes.

Belo Horizonte: has a digital PB since 2006, has enabled the city to scale-up: almost 100 000 people participate

Smart Solutions to Reduce Costs The expenses of the municipality are usually composed of: internal functioning, services and infrastructure, reimbursement of loans.

Focus on how smart technologies can help local governments reduce costs by: 1. Optimizing the administrative procedures 2. Reducing energy consumption

Optimization of administrative procedures: e-government Where: city of Valencia, Spain. 800 000 inhabitants The initiative: -

2007: e-government action plan.

-

2010: start of the digitalization of all processes and records of the administration, mapping and training.

-

2014: launch of the Plataforma Integrada de Administracion Eletronica (PIAE) and the Electronic Office.

The result: 100% of electronic management of records. 2500 municipal officers active users. 20% reduction in processing time. In its first operational year, the project saved 170 million euros to the City Council (the cost of the project was 2 millionâ‚Ź)

Generate savings with energy efficiency policies ďƒ˜ Energy efficiency policies have beneficial impacts both on the environment and the energy bill. ďƒ˜ For cities, expenditure on energy often comes second after staff and human resources.

Local governments different levels: - energy production, - distribution, - consumption.

can

act

at

With a variety of smart technologies: Technological innovations such as LED lighting, solar panels, landfill gas-to energy projects, etc.

ICT innovations that allow for more efficient management thanks to data analytics.

Generate savings with energy efficiency policies Energy supply systems: smart grids What it is: an energy network that uses digital and ICT systems to monitor and manage the transport of electricity from all generation sources to endusers. It involves smart meters, energy storage devices, advanced grid controls and sensors, accessible energy data for users, etc.

Generate savings with energy efficiency policies Energy supply systems: smart grids Expected results:  Increase efficiency, minimize costs and environmental impacts while maximizing system reliability.  Reduced energy consumption of 10 to 15%;  Savings for the municipality (due to less losses and interruptions) and in the household energy bill (due to a bigger control), between 10 and 20%.

Huge potential in Latin America where in average 9% of the continent’s electricity is stolen, reaching 30% in some regions (Brazil and Mexico).

Generate savings with energy efficiency policies Management of municipal assets => Both street lighting and municipal buildings represent each 40% of cities energy bill.

Generate savings with energy efficiency policies Management of municipal assets: Street lighting Solution: LED technology combined with a sensor control network.

Results: lower greenhouse gas emissions, reduced maintenance cost, reduced energy cost (up to 80%)

Generate savings with energy efficiency policies Management of municipal assets: Street lighting Examples: - Los Angeles, replaced 150 000 street lights, cut 65% of energy consumption, saves USD 7 million per year.

- Sensonate, El Salvador, replaced 4000 street lights, 50% energy consumption reduction.

- S達o Paulo: will replace 600 000 street lights, for 80% cut in the energy bill.

Generate savings with energy efficiency policies Management of municipal buildings

municipal

assets:

Solutions to save energy in municipal buildings: - Retrofit existing equipment - Computer-based Management systems - Local energy generation and storage systems Expected results: up to 40% energy savings

Smart technologies represent huge opportunities, BUT …:  We need tailor-made adapted to local contexts

solutions,

 The technology must be adapted to local capacities to avoid digital dependency  When partnering with the private sector: be sure to take the time to negotiate the contract and to ensure the transfer of knowledge and skills  Include citizens in all processes

Save the date!

2016 Uraia workshop in Nicosia (Cyprus), April 19 and 20th “The impact of SMART technologies in the municipal budget: improved tax recovery and energy efficiency for better services�

THANK YOU! Mariana Nascimento Collin Representative of FMDV in Brazil Coordinator of the Uraia Platform with UN-Habitat mnascimento@fmdv.net @UraiaCIT | @fmdv_org www.uraia.org | www.fmdv.net