Local Governments Spending Less and Taxing More
Local governments are beginning to feel the trickle-down effects from state governments that are attempting to pare their deficits by clamping down on the aid they provide to municipalities.
A survey of 330 cities and towns conducted this summer by the National League of Cities found that cities are trying to cope with the situation by raising fees and taxes while cutting infrastructure spending and public employees.
Among the survey’s findings:
- Four out of five cities (79%) are less able to meet financial needs than they were last year.
- Cities face a 4% gap between revenue and spending, the highest in more than a decade.
- State aid to cities has declined and it will continue to decline.
- Responding to fiscal pressures, 61% of cities and towns are increasing fees. Fifty-four percent are increasing new fees and drawing down their rainy day funds. Twenty-five percent have decided to increase their property taxes.
On top of everything else, the National Association of Counties reports that 70% of counties are facing budget shortfalls.