City Fiscal Conditions in 2012
The nation’s cities continue to cut personnel, infrastructure investments and key services as the prolonged effects of the economic downturn take their toll on city finances according to the National League of Cities 27th annual City Fiscal Conditions report.
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Revenue and Spending Trends
As finance officers look to the close of 2012, they project the sixth year in a row of year-over-year declining revenues.
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Tax Revenues
A continued decline in property tax revenues in 2012 reflects the inevitable and lagged impact of real estate market declines.
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Factors Influencing City Budgets
Fiscal pressures on cities include declining local tax bases, infrastructure costs, employee-related costs for health care, pensions and wages, and cuts in state and federal aid.
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Revenue Actions
Confronted with declining fiscal conditions, the most common action taken to boost city revenues has been to increase the levels of fees for services.
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Spending Cuts
Cities are reducing personnel commitments, delaying or cancelling infrastructure projects, and cutting local services.
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Reductions in State Aid
States have been reducing aid and transfers to city governments adding to the economic pressure facing cities.
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Ending Balances
Ending balances, or “reserves,” while still at modestly high levels, are projected to decline as cities use these balances to weather the effects of the downtown.
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Meeting Fiscal Needs
Despite declining revenues, city finance officers report that their cities are better able to meet financial needs in 2012 than in 2011.
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