Estimation and forecasting of revenues and financing sources of Hamedan municipalities

Mirali, Faranak; Davarikish, Razieh; Rahbar, Amir Hossein; Jafari, Adel

doi:10.22034/uep.2025.557976.1773

Estimation and forecasting of revenues and financing sources of Hamedan municipalities

Document Type : Original Article

Authors

Faranak Mirali ¹

Razieh Davarikish ²

Amir Hossein Rahbar ³

Adel Jafari ⁴

¹ PhD in Public Sector Economy, Faculty of Economics and Social Sciences, Bu-Ali Sina University, Hamedan, Iran

² Assistant Professor, Faculty of Economics and Social Sciences, Bu-Ali Sina University, Hamedan, Iran

³ Assistant Professor, Faculty of Management and Accounting, Bu-Ali Sina University, Hamadan, Iran

⁴ Master of Accounting, Director of Planning and Budget, Hamadan Municipality

10.22034/uep.2025.557976.1773

Abstract

Municipalities depend on stable and predictable revenue streams to fulfill statutory obligations and implement urban development strategies. The Municipality of Hamadan, as a rapidly growing metropolitan area, faced challenges between 2009 and 2023, including construction recession, economic volatility, inflationary pressures, and declining private investment. This study aims to analyze historical revenue trends (2009–2023), evaluate the stability of revenue sources, and forecast the municipal revenue structure for 2029. This applied, descriptive–analytical study categorizes revenues into seven primary groups: General tolls, specific tolls, service charges and income of for-profit institutions, municipal funds and property, government grants and aids, donations/contributions/gifts, and revenue from the capital and financial assets disposal. Time-series regression models and ordinary least squares (OLS) were employed to assess trends. Specific taxes and service charges/income from for-profit institutions showed average annual growth rates of 34.2% and 35.9%, respectively, with substantial volatility. Municipal funds and assets exhibited the highest growth at 61.3%, whereas government grants were unstable, with an average growth of 24.2%. Capital asset disposals increased by 43.8%, primarily during fiscal constraints. OLS-based projections indicate that by 2029, the revenue structure will largely maintain its current composition, with dominant contributions from general taxes, municipal funds and assets, and capital asset disposals. Hamadan Municipality remains heavily reliant on unstable revenue sources, with a limited share of stable urban revenues. These findings underscore the need for strategic financial planning, revenue diversification, and the development of resilient municipal fiscal policies to ensure sustainable urban financial management.

Keywords

Capital assets

Hamedan Municipality

municipal revenue structure

ordinary least squares (OLS)

revenue forecasting

20.1001.1.28212118.1405.7.11.4.0

Subjects

Urban Economy

Akbari M., & Hamidzadeh-Khiavi S. (2016). An analysis of revenue sources and strategies to increase them in Ahar Municipality using the SWOT analytical method. In Proceedings of the 3rd International Conference on Research in Science and Technology, 2016, Course: 3. https://www.sid.ir/paper/859959/fa [In Persian]
Ultsch, A., & Behnisch, M. (2017). Effects of the payout system of income taxes to municipalities in Germany. Applied geography, 81, 21-31.‏ DOI:10.1016/j.apgeog.2017.02.001
Bahl, R., & Linn, J. (2014). Governing and financing cities in the developing world. Lincoln Institute of Land Policy.
Bayat G., Nezafati Namin F., Adibi Saadinezad F., & Shahroodi M. (2019). Increasing the sustainable income of the urban management strategy in achieving the improvement and improvement of the productivity of the organization. Specialized scientific journal - Iranian architecture and urban planning, 15 (13). [In Persian]
Bifulco, F., Tregua, M., Amitrano, C. C., & D’Auria, A. (2016). ICT and smart city: Critical issues and perspectives. Cities, 50, 47–55. https://doi.org/10.1016/j.cities.2015.09.010.
Slack, E., & Tassonyi, A. T. (2017). Financing Urban Infrastructure in Canada: Who Should Pay? Institute on Municipal Finance and Governance.
Danesh-Jafari D., Babajani J., & Karimi-Esboei S. (2014). Assessment of the financial and revenue sustainability of Tehran Municipality. Urban Economics and Management Quarterly, 2(7): 15–34. DOI: 10.18869/acadpub.iueam. [In Persian]
Dashti J., & Pak-Maram A. (2024). Factors affecting municipal revenues and expenditures (Case study: Tabriz Municipality). Journal of Technology in Entrepreneurship and Strategic Management, 3(4): 72–83. https://doi.org/10.61838/kman.jtesm.3.4.5. [In Persian]
Githinji, R. K., Mwaniki, M., Kirwa, K. J., & Mutongwa, S. M. (2014). Information and communication technology (ICT) on revenue collection by Kenyan Counties. International Journal of Academic Research in Business and Social Sciences, 4(11), 238-260. http://dx.doi.org/10.6007/IJARBSS/v4-i11/1303.
Hajilou M., Mirehei M., & Pilevar M. (2017). A study on sustainable municipal revenue sources (Case study: Shabestar city, East Azerbaijan Province). Urban Economics and Management, 5(20): 1–22. DOI: 10.29252/iueam.5.20.1. [In Persian]
Iran Codify (Ministry of Interior). (2024). Regulations on sustainable revenues of municipalities and village councils. Iran: Ministry of Interior. [In Persian]
Jicingi, G., Okeyo, T., & Mwangi, P. (2014). ICT and tax revenue mobilization in Kenya. International Journal of Public Administration, 37(2), 120–134. https://doi.org/10.1080/01900692.2013.798812.
Kanaani-Moghadam S., Shiea E., Behzādfar M., & Saeedeh-Zarābādi Z. S. (2018). The necessity of urban land-use planning consistent with the smart city, emphasizing the effects of information and communication technology, using the AHP method. Urban Management, 10(35): 59–75. https://sid.ir/paper/199365/fa. [In Persian]
Kordestani G., & Shahbazi V. (2025). Investigating sustainable income sources of Hamedan municipality and providing a model for stabilizing income sources and providing financial resources in municipalities (case study: Hamedan municipality). Operational and Performance Research in Accounting and Auditing, 5(2): 81-104. [In Persian]
Laufs, J., Borrion, H., & Bradford, B. (2020). Security and the smart city: A systematic review. Sustainable Cities and Society, 102023.‏ https://doi.org/10.1016/j.scs.2020.102023.
Li, W., & Li, D. (2024). How does technological innovation affect the fiscal decentralization of local governments? Evidence from China. Heliyon, 10(9). https://doi.org/10.1016/j.heliyon.2024.e30132.
Madadi A., Norouzi P., & Hosseinzadeh Dalir K. (2020). Analysis of municipal revenue sources with an emphasis on sustainable revenues (case study: Tabriz Municipality). New Perspectives in Human Geography, 12(4): 346–368. [In Persian]
Mirzaei H., Jafari Shahrestani A., & Khezr S. (2022). Designing the model of factors affecting the income of districts of Tehran Municipality, using panel data models (FGLS & PCSE). Urban Economics, 7(1): 93-102. DOI: 10.22108/ue.2023.137388.1255. 10.22108/ue.2023.137388.1255. [In Persian]
Nesari R., Montazeri R., & Hosseinzadeh N. (2015). Strategies for sustainable financial resource provision for Tehran Municipality in the five-year plan, emphasizing the policies of the resistance economy. Urban Economics and Management, 3(11): 99–116. URL: http://iueam.ir/article-199-1/fa.html. [In Persian]
Nijkamp, P., & Cohen-Blankshtain, G. (2009). The importance of ICT for modern cities: Opportunities and risks. European Planning Studies, 21(12), 1–18. DOI:10.1007/978-3-642-32141-2-13.
Nijkamp, P., & Salomon, I. (1989). Future spatial impacts of telecommunications. Transportation Planning and Technology, 13(4), 275-287.‏ https://doi.org/10.1080/09654313.2012.722940.
Nitoslawski, S. A., Galle, N. J., van den Bosch, C. K., & Steenberg, J. W. (2019). Smarter ecosystems for smarter cities? A review of trends, technologies, and turning points for smart urban forestry. Sustainable Cities and Society, 101770.‏ https://doi.org/10.1080/03081068908717406.
Odoyo, C. O., Moses, O., John, M. O., Aila, F. O., Ojera, P. B., & Siringi, E. M. (2013). Effect of information systems on revenue collection by local authorities in Homa Bay County. Kenya. Universal Journal of Accounting and Finance, 1(1), 29-33.‏ DOI: 10.13189/ujaf.2013.010104.
Organisation for Economic Co-operation and Development (OECD). (2022). Revenue statistics 2022. OECD Publishing. https://doi.org/10.1787/rev_stats-2022-en.
Shah, A. (2006). Local governance in developing countries. World Bank. https://doi.org/10.1596/978-0-8213-6565-6.
Wallis, J., J., & Oates, W., E. (1972). Fiscal decentralization and local government efficiency. Public Finance, 27(1), 1–21. World Bank.
Tran, M. H., & Nguyen, N. T. (2024). Impacts of fiscal decentralization on performance of local government expenditure: Evidence from Vietnam. Journal of Infrastructure, Policy and Development, 8(6), 3489. DOI: 10.24294/jipd.v8i6.3489.
Wang, Y., Huang, X., Zhang, T., Jiang, B., & Wang, X. (2024). Impact of fiscal decentralization and local government competition on the supply of basic public services: Evidence from prefecture-level cities in China. Heliyon, 10(4), e26511. https://doi.org/10.1016/j.heliyon.2024.e26511.
World Bank. (2023). World Development Report 2023: Migrants, Refugees, and Societies. © World Bank. http://hdl.handle.net/10986/39696.