The Public Finance Panel's mission is to foster and shape a broader and more visible public discourse about the need for reform to the system of public finance and to the related intergovernmental system, and to provide guidance and recommendations to city officials about dealing with specific fiscal challenges in their cities.
The Panel has developed a framework for understanding the fiscal and intergovernmental challenges facing cities and an action plan, published in a report that was adopted by the NLC Board of Directors in 2006, Taxing Problems: Municipalities and America's Flawed System of Public Finance. The Board-approved report builds on the Panel's earlier work and report, Toward a System of Public Finance for the 21st Century (2001).
Challenges identified by the panel include:
- A mismatch between contemporary economic growth and tax structures created more than a half-century ago, and the unfairness and inequities created by this mismatch;
- An unraveling of the partnership between federal, state, and local governments for funding and delivering public services;
- Changing demographics, urbanization, suburbanization, population growth and immigration, and the changing composition of households and the implications of those changes for city services and costs; and
- Political challenges to public finance including the lack of civic engagement in democratic processes and the anti-government and anti-tax rhetoric that often pervades public discussion about government and finance.
Other Activities and Products
- Developed and disseminated NLC resolutions (1) addressing the need for a venue for analysis of and discourse about intergovernmental relations and (2) expressing opposition to tax and expenditure limits on local governments;
- The Panel is engaged in an ongoing collaboration with NLC's Finance, Administration, and Intergovernmental Relations (FAIR) Policy Committee about federal tax reform;
- The Panel contributes ideas to NLC's ongoing research efforts to monitor city fiscal health, published in NLC's annual survey report on City Fiscal Conditions;
- The Panel played an advisory role in NLC's report, Cities and State Fiscal Structure analyzing differences in local tax systems and structure across the 50 states conducted in conjunction with the Pew Center on the States and the Great Cities Institute at the University of Illinois at Chicago;
- The Panel served as the Advisory Committee for NLC's Legislating For Results project, a project that provided local officials with training and assistance in using performance information to improve local outcomes, conducted in conjunction with The Urban Institute;
City Fiscal Conditions in 2010
The nation’s city finance officers report that the fiscal condition of the nation’s cities continues to weaken in 2010 as cities confront the effects of the economic downturn. Local and regional economies characterized by struggling housing markets, slow consumer spending, and high levels of unemployment are driving declines in city revenues. In response, cities are cutting personnel, infrastructure investments and key services.
Local Governments Cutting Jobs and Services (2010)
Unemployment in America is a national crisis. It is also a local crisis. As individuals and families struggle to find work, make ends meet, and keep their homes amid an anemic economic recovery, they increasingly turn to local services for support.
State of America's Cities Survey on Jobs and the Economy (2010)
Three in four (75%) city officials report that overall economic and fiscal conditions have worsened over the past year. To deal with the fiscal implications of declining economic conditions, seven in ten city officials report making cuts to personnel (71%), including hiring freezes, layoffs, and furloughs, and delaying or canceling capital projects (68%). Twenty-two percent of city officials indicate they are cutting public safety budgets, which is typically an option of last resort.
Fiscal Challenges Facing Cities: Implications for Recovery (2009)
The current economic crisis is not only a national crisis; it is also a metropolitan crisis. And soon the downturn will bring a local government fiscal crisis. Given the normal lag time of 18 to 24 months between changes in the economic cycle and its impact on city fiscal conditions, local officials anticipate that the next year or two will bring large-scale city government layoffs, deep cuts to local government services, and halted or delayed capital projects. Just as federal stimulus package spending trails off, city fiscal dynamics could well place a serious drag on economic recovery.
City Budget Shortfalls and Responses: Projections for 2010-2012 (2009)
While the nation’s economy may be approaching the late stages of the worst economic downturn since the Great Depression, local government budget tightening and spending cuts over the next several years could well impose a significant drag on the nation’s economic recovery. Cities face layoffs, canceled contracts with small businesses and vendors, reduced services and sizable budget shortfalls for 2009 that are expected to grow much more severe and widespread from 2010 to 2012.
Cities and State Fiscal Structure (2008)
This report examines state-local fiscal structures and the way in which state fiscal regimes do or do not create a fiscal environment that makes it difficult for municipalities to effectively fund their own activities – including those that contribute to economic development at the local and regional levels.