NLC: Cities Cut Jobs and Infrastructure as Finances Continue to Weaken

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% decrease by the end of 2011. This is the fifth straight year of declines in revenue with probable further declines in 2012.

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% with further declines likely in 2012 and 2013.

Cities are responding by cutting personnel (72%), delaying infrastructure projects (60%), and increasing service fees (41%). One in three (36%) 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, in a prepared statement. 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%), shared revenues (49%), and reductions in reimbursements and other transfers (32%). 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% of city finance officers report that their cities are less able to meet financial needs in 2011 than in 2010.

To access the complete National League of Cities report, please visit:

NLC Research Brief on America’s Cities: City Fiscal Conditions in 2011 (September 2011)

Background information:

NLC Center for Research & Innovation: City Fiscal Conditions in 2011

National League of Cities