Key Findings of 2013 City Fiscal Conditions Report
Revenue and Spending Trends
- For 2013, city finance officers project a small year-over-year increase in general fund revenues measured in inflation-adjusted dollars – the first increase since 2006.
- In a shift from prior years, more city finance officers report increases in the local tax base (51%) and the overall health of the local economy (66%).
- Property tax revenues continued to decline in 2012 and are projected to decline in in 2013, reflecting the lagged impact of real estate market declines.
- Sales tax revenues and local income tax revenues experienced marked increases in 2012, with projections for further growth in 2013.
- Ending balances increased in 2012 as cities began to rebuild reserves that were used to help weather the aftermath of the Great Recession. Similarly, general fund expenditures declined in 2012 and are projected to increase marginally in 2013.
- Factors putting pressure on city budgets include infrastructure costs, public safety costs, employee-related costs for health care, pensions, wages, and cuts in state and federal aid.
- Leading the list of factors that finance officers say have increased over the previous year are health benefit costs (84%) and pension costs (80%).
- Infrastructure (79%) and public safety (69%) demands were most often noted as having increased among specific service arenas.
- Increases in prices, or costs of services, were also noted by the majority of city finance officers (81%).
- Leading factors that city finance officers report as having decreased are levels of federal aid (49%) and state aid (48%).
- Confronted with these pressures and conditions, cities are maintaining local services while continuing to reduce personnel costs for pensions, health care benefits, and employee wages.
Revenue Actions and Spending Cuts
- As has been the case for much of the past two decades, regardless of the state of national, regional, or local economies, the most common action taken to boost city revenues has been to increase the amount of fees charged for services.
- Two in five (39%) city finance officers report that their city has raised fee levels.
- Approximately one in four cities increased the number of fees that are applied to city services (22%), and one in five (19%) cities increased the local property tax in 2013.
- Since the mid-1990’s, the percentage of city finance officers reporting increases in property taxes in any given year has been reported at about this same level, reflecting state- and voter-imposed restrictions on local property tax authority as well as the political challenges of raising property tax rates.
- Increases in sales, income or other tax are even less common than property tax increases, and this continued to be the case in 2013.