NLC survey: Cities see further decline in revenue

A report from the National League of Cities indicates that for the sixth straight year, city revenues have declined, due to factors including state and federal aid cuts and increases in health care and pension costs.

The NLC’s survey of city finance officers indicates that these pressures are prompting cities to eliminate personnel, postpone or cancel infrastructure projects, and reduce local services. The report also suggests that cities will continue to face budget challenges in 2013 as a result of stagnant markets, high unemployment, and expected federal budget cuts.

“This report demonstrates the difficult operating environment facing city officials,” said NLC President Ted Ellis, the mayor of Bluffton, Ind. “Local leaders are paying their bills and working to create opportunities for growth in their communities.”

The report does show some signs of local improvement. The proportion of city finance officers who said they are less able to meet their communities’ needs than they were the previous year has declined from 57 percent in 2011 to 43 percent this year.

“While there are signs of improvement, it is still too early to say that cities have turned the corner,” said Christopher Hoene, a co-author of the report and the director of the NLC’s Center for Research and Innovation.

“The broader economy is still growing at a slow rate,” Hoene added, “and housing values, income levels and consumer spending – the main determinant of tax receipts – are not improving significantly. It all points to a difficult 2013 for cities.”

Three-quarters of finance officers who completed the survey cited health care costs, pension costs and infrastructure costs as major concerns. Also of concern were public safety demands, reduced federal and local aid, declining local taxes, and the declining health of their local economies.

The report can be downloaded at www.nlc.org.