Revenue Diversity
The degree to which a city's revenue comes from multiple sources (property tax, sales tax, fees, grants) rather than being concentrated in a single stream.
How It Works
Revenue diversity is a key indicator of fiscal resilience. Cities that rely on a single dominant revenue source are vulnerable to sector-specific shocks. CitySpend measures revenue diversity using an adapted Herfindahl-Hirschman Index (HHI) across major revenue categories. A perfectly diversified city would score 100; a city getting all revenue from one source would score near 0. Revenue diversity is one of the six factors in the CitySpend Fiscal Health Score.
Related Terms
- 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.
- Sales Tax — A consumption tax collected on retail purchases. Many cities levy a local sales tax on top of state and county rates.
- Intergovernmental Revenue — Money a city receives from federal or state government through grants, shared taxes, or direct transfers.
- Fiscal Health Score — CitySpend's proprietary 0-100 composite score (graded A through F) measuring a city's overall financial health across six weighted factors.
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.