The National League of Cities has been conducting extensive municipal budget data collection and research annually since 1985 through its annual survey of City Fiscal Conditions.  In light of the events of September 11, 2001, and the struggling economy, among other things, it is important to note the most recent NLC findings. 

By any number of measures, cities and towns are confronting increased fiscal stress.  According to city officials, revenue conditions are declining, largely as a result of slow-growing or declining sales tax, income tax, and tourism tax revenues.  State budget deficits are resulting in reductions in state aid and support as well. 

Meanwhile, pressures for increased expenditures are not yielding.  Municipal expenditures are increasing most in the areas of personnel costs (wages, health care costs, and pensions), and in public safety as municipalities cope with increased concerns about crime and homeland security.  Many city officials are subsequently making tough decisions, including reducing the municipal workforce, scaling back budgets, reducing capital investments, raising fees and charges, and drawing down reserves. 

The lone bright spots in the municipal finance picture are the continued resiliency of the property tax, driven by robust real estate markets, and cities preparations for the downturn through the development of high ending balances (reserves).  Despite these bright spots and recent signs of economic recovery, city finance officers remain pessimistic about fiscal conditions in the coming years.

Sources:
Bingham, Richard, et al. Managing Local Government: Public Administration in Practice. California Sage Publications, 1991.

Pagano, Michael A. City Fiscal Conditions in 2004. Washington, DC: National League of Cities, 2004.

Pagano, Michael A. City Fiscal Conditions in 2003. Washington, DC: National League of Cities, 2003.

1997 Census of Governments, Volume 4: State and Local Finances. Washington, DC: U.S. Department of Commerce, Bureau of the Census, 1999.