Economic Development
City government efforts to attract business investment, create jobs, and grow the tax base — including incentives, infrastructure, workforce programs, and marketing.
How It Works
Economic development spending includes tax incentives (abatements, TIF), direct business subsidies, site preparation, workforce training, small business assistance, and marketing campaigns. The effectiveness of municipal economic development spending is hotly debated. Critics argue that tax incentives represent a "race to the bottom" where cities compete by giving away revenue. Proponents argue that strategic investment attracts employers that generate tax revenue and raise living standards.
Related Terms
- Tax Increment Financing (TIF) — An economic development tool where the increase in property tax revenue generated by development in a designated district is captured to pay for infrastructure improvements in that district.
- Property Tax — A tax levied on real estate (land and buildings) based on assessed value. Property taxes are the single largest revenue source for most U.S. city governments.
About This Definition
This definition is part of the CitySpend Municipal Finance Glossary — 59 terms explaining how city governments fund and manage public services. All definitions are written in plain language for taxpayers, journalists, students, and municipal bond investors.