Magazine article Government Finance Review

City Finances Remain Troubled, Survey Finds

Magazine article Government Finance Review

City Finances Remain Troubled, Survey Finds

Article excerpt

General city revenues continue to fall for the fifth straight year, with a projected decrease of 2.3 percent by the end of 2011, according to the National League of Cities' 26th annual City Fiscal Conditions report. The revenue decline is mainly due to the weak property market, which is having a negative effect on property tax revenue. Property tax collections are expected to decline by 3.7 this year, with further declines likely in 2012 and 2013. Income tax receipts are also down, by1.6 percent. Sales tax receipts were about the same in 2011 as in 2010, which was the worst decrease in sales tax revenue in 15 years.

Cities are responding by cutting personnel (72 percent), delaying infrastructure projects (60 percent), and increasing service fees (41 percent), according to the report. In addition, 36 percent of cities indicated that they are modifying employee health-care benefits.

National real estate and consumer spending indicators point to continued economic struggles for local governments, meaning that it will be difficult for cities to raise additional revenue for the immediate future. If regional housing markets, unemployment, and consumer confidence struggle, city revenues will continue to lag, city leaders will face more cuts, and those decisions will act as a drag on the national economy, the National League of Cities (NCL) pointed out. …

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