NLC survey shows improving fiscal conditions
The economic health of most cities and towns across America continues to show improvement, according to this year’s National League of Cities survey of city fiscal conditions. And that improvement is allowing municipal leaders to provide better public services, whittle down their backlog of needs and hold the line on or even reduce some local taxes.
The survey, to which 338 cities responded, showed that:
* more than two-thirds (68 percent) reported that they were better able to meet financial needs in 1997 as opposed to 1996 (one in three reported being less able);
* fiscal pressures caused by increasing infrastructure needs, increasing public safety needs and inflation were identified by nearly two in three cities as having had a negative effect on their ability to meet budgetary needs in 1997, while an expanding tax base and improved local economies were identified by 65 percent and 49 percent of respondents, respectively, as having had positive effects; and
* 55 percent of cities increased actual levels of capital spending and boosted the rate of growth in operating spending, 36 percent expanded the size of the municipal workforce and 29 percent increased city service levels.
More than one in four cities contracted out new services in 1997; nearly one in four increased productivity and 18 percent entered into more interlocal agreements. Regionally, more Western cities reported contracting out services (40 percent), while more Northeastern cities engaged in new interlocal agreements (38 percent).
Only 9 percent reduced the growth rate in their operating budgets in 1997, down 24 percentage points from 1996, representing the single largest change in a fiscal action in 1997 and a dramatic reduction considering that nearly three-quarters of all cities took this action in 1991 and 1992.
“Most of our cities and towns have a lot of reasons to celebrate what they have achieved through a lot of hard work and careful budgeting over the past five years,” says NLC President and Oklahoma City Councilmember Mark Schwartz. “Their finances are stronger, they are providing services more efficiently, and they are taking steps to make the repairs, improvements and new investments needed to be attractive, safe and productive places.”
Among larger cities, federal environmental mandates and the effects of state restrictions on local government finances were chief concerns, while for cities of less than 50,000 people, the overall impacts of prices and cost-of-living, along with costs of employee health benefits, drew most attention.
Police services led the list of improved service levels, while recreation programs, telecommunications services, road improvements, affordable housing programs, emergency medical services and recycling programs were also cited. A number of cities reported innovative approaches to raising revenue to support local services.
Land leases for communications towers have become a significant revenue source for some cities, including Alhambra, Calif., which reported gaining $900,000 in various lease revenues from city-owned property, and Sterling Heights, Mich., which reported $100,000 in telecommunications leases.
The survey was conducted by Michael Pagano, political science professor at Miami University in Miami, Ohio. The university’s Center for Public Management and Regional Affairs handled the data management tasks, and NLC Research Manager Jamie Woodwell coordinated the project.
Copies of the report, City Fiscal Conditions in 1997, can be ordered from the NLC Publications Center, P.O. Box 491, Annapolis Junction, MD 20701; telephone (301) 725-4299. The price is $20 ($15 for NLC members), plus $3 shipping and handling.
