Cities Struggling to Make Ends Meet, According to League of Cities Report
America’s cities are having a harder time meeting their financial needs this year, and expectations for 2005 are equally grim, according to the National League of Cities (NLC). Its survey on City Fiscal Conditions in 2004 finds that local revenues are not keeping pace with increases in spending for public safety and infrastructure and the growing costs of municipal employee health benefits, pensions and wages.
More than three in five of the city finance directors who were surveyed said their cities this year have been less able to meet their fiscal obligations, regardless of population size, region or taxing authority. Cities that rely on income taxes — 83% of those polled — were more likely to report deteriorating fiscal health, compared to 58% of those relying exclusively on property taxes and 52% relying on the sales tax.
Adjusting for inflation, 2004 marks an unprecedented third straight year of revenue declines for the cities. As a result, 54% of them reported that they have increased fees and charges for services, another 25% have opted for increasing property taxes and 22% have increased impact or development fees.
Michael A. Pagano, senior fellow at the Great Cities Institute at the University of Illinois at Chicago and author of the report, cited the combined fiscal pressures of increased costs for public safety, Homeland Security and other federal mandates coupled with reductions in state aid to local governments as critical problems facing local governments.