Factors Influencing City Budgets

A number of factors combine to determine the revenue performance, spending levels and overall fiscal condition of cities.
  • City finance directors report that employee health benefit costs and pension costs have increased.
  • Infrastructure and public safety demands have increased.
  • Prices, or costs, of services have increased.
  • Federal and state aid to cities have decreased.
  • The local tax base and the health of local economy have decreased.
Each year, the survey presents city finance directors with a list of factors that affect city budgets. Respondents are asked whether each of the factors increased or decreased from the previous year and whether the change is having a positive or negative influence on the city’s overall fiscal picture.

Leading the list of factors that finance officers say have increased over the previous year are health benefit costs (81%) and pension costs (77%). Infrastructure (75%) and public safety (61%) demands were most often noted as increasing among specific service arenas. Increases in prices, or costs of services, were also noted by most city finance officers (83%).

Leading factors that city finance officers report to have decreased are levels of federal aid (51%), state aid (50%), the local tax base (47%) and the health of the local economy (42%).

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When asked about the positive or negative impact of each factor on city finances in 2012, at least seven in ten city finance officers cited service costs (79%), health benefit costs (77%), pension costs (74%), and infrastructure demands (70%) as negatively effecting city budgets.

About half of city finance officers also cited levels of federal (45%) and state (50%) aid, public safety costs (57%), and a declining tax base (48%) as having negative effects.

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