Government Fleet Top News

Study Shows Cities’ Finances Continue to Weaken

October 20, 2011

WASHINGTON - The nation's cities are cutting personnel and infrastructure projects as the economic downturn continues to take its toll on city finances according to the National League of Cities' (NLC) 26th annual City Fiscal Conditions report.

The report reveals that general city revenues are continuing to fall, with a projected -2.3 percent decrease by the end of 2011. This is the fifth straight year of declines in revenue with probable further declines in 2012, according to the report.

The revenue decline is mainly due to the suppressed property market that is negatively impacting property tax revenue. Property tax collections are expected to decline by -3.7 percent, with further declines likely in 2012 and 2013

Income tax receipts are also experiencing a decrease of -1.6 percent. Sales tax receipts remained largely flat, but this is at last year's level which saw the worst decrease in sales tax revenue in 15 years.

Cities are responding by cutting personnel (72 percent), delaying infrastructure projects (60 percent) and increasing service fees (41 percent). One in three (36 percent) cities report modifications to employee health care benefits.

National indicators in the property markets and consumer spending point to continued economic struggles at the local level. Cities will have a difficult time in raising additional revenue for the immediate future.

"The biggest question for cities lies in the uncertainty about the health of the national economy, which is driven by a collection of city-regional economies," said Christopher Hoene, director of the Center for Research and Innovation at NLC. He continued, "If regional housing markets, unemployment, and consumer confidence struggle, city revenues will continue to lag, city leaders will face more cuts, and those decisions will act as a drag on the national economy."

Cities have also been forced to contend with significant decreases in state aid, adding to the pressures facing cities. Since 2009, cities report cuts in general aid (50 percent), shared revenues (49 percent), and reductions in reimbursements and other transfers (32 percent). As states make these cuts to balance their budgets, it puts greater budgetary pressure on local governments that must balance their budgets as well.

Confronted with revenue shortfalls, budget cuts, and state aid cuts, 57 percent of city finance officers report that their cities are less able to meet financial needs in 2011 than in 2010, according to the study.

Comment On This Story

Name:  
Email:  
Comment: (Maximum 10000 characters)  
Leave this field empty:
* Please note that every comment is moderated.

FleetFAQ

Fleet Management And Leasing

Jack Firriolo from Merchants will answer your questions and challenges

View All

 

Public Fleet Tracking And Telematics

Amin Amini from Verizon will answer your questions and challenges

View All

 

Fuel Management

Bernie Kanavagh from WEX will answer your questions and challenges

View All

 

Recent Topics

I am requesting feedback on how often you replace street sweepers? Also, when you surplus the old sweeper, what has brought you the...

View Topic

How many different types of antifreeze do you stock? I’m curious to know what others are doing to deal with the numerous specifications...

View Topic

Fleet Documents

1106 Fleet Documents (and counting) to Download!

Sponsored by

Honda Motor Co. Ltd. is a Japan-based global manufacturer of automobiles, motorcycles, and power products founded in 1948.

Read more