Beyond 2012
2012 reveals a number of continuing and challenging trends for city fiscal conditions. The impacts of the economic downturn are clear in city projections for final 2012 revenues and expenditures and in the actions taken in response to changing conditions.
The local sector of the economy is continuing to realize the effects of the recession and a slow economic recovery. Depressed real estate markets, low levels of consumer confidence and high levels of unemployment will continue to play out in cities through 2012, 2013 and beyond.
The fiscal realities confronting cities include a number of persistent concerns:
- Weakened real estate markets are only recently showing signs of recovery, as the number of sales increase while the median price continues to decline; projections indicate a very slow recovery of real estate values nationwide (although regional markets will vary considerably), meaning that cities will be confronted with declines or slow growth in future property tax collections in future years;
- Other economic conditions – particularly prolonged effects of unemployment and wage reductions – will weigh heavily on future city income tax revenues and sales tax receipts;
- Two of the factors that city finance officers report as having the largest negative impact on their ability to meet needs are employee- and retiree-related costs for health care coverage and pensions. Underfunded pension and health care liabilities will persist as a challenge to city budgets for years to come; and
- Facing revenue and spending pressures, cities are likely to continue to operate with reduced workforces, cut services and infrastructure investment, and draw down ending balances in order to balance budgets.
City Fiscal Conditions in 2012
© 2013 National League of Cities | 1301 Pennsylvania Avenue NW Suite 550, Washington, DC 20004
