State budgets have also been confronted with several years of shortfalls and constraints. In many cases, states have been reducing aid and transfers to city governments.
NLC’s 2012 survey asked city finance officers about the types of state actions they’ve encountered since 2010, including:
This mix of state actions to balance state budgets adds to the cyclical economic pressures that cities and other local governments are confronting. Looking across state and local actions in response to fiscal stress reveals the pro-cyclical nature of state-local fiscal actions – that during economic downturns the decisions that state and local leaders make to balance budgets often exacerbate the effects of the downturn for other levels of government, for employment, and for the quality of life and well-being of individuals and communities.