Fiscal Conditions in 2008: National League of Cities Research Brief on America’s Cities

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Confronted with declining economic conditions driven by downturns in housing, consumer spending, and jobs and income, city finance officers report that the fiscal condition of the nation’s cities has weakened dramatically in 2008.

Among the findings of the National League of Cities’ latest annual survey of city finance officers are:

❋ Two in three city finance officers (64%) report that their cities are less able to meet fiscal needs in 2008 than in the previous year;

❋ Final tallies for 2007 reveal that city revenues, when accounting for inflationary factors, remained flat (growth of 0.1%), while spending increased by 3.0%;

❋ As finance officers look to the close of 2008, they predict that revenues and spending will decline in inflation-adjusted terms, with revenues decreasing by 4.3% and spending decreasing by 1.5%;

❋ Property tax revenues increased by 6.3% in 2007, but are predicted to decline by 3.6% by the close of 2008;

❋ Spending pressures stem from rising costs, such as energy and fuel prices, public safety and infrastructure needs, and employee-related costs for health care, pensions, and wages;

❋ To balance annual budgets and meet ongoing spending needs, many cities are increasing fees and charges for services; and,

❋ Ending balances, or “reserves,” remain at high levels and will provide a buffer against the current downturn.