City budgets hit hard by economic downturn, according to NLC report
Many cities will have to struggle to make ends meet for the next two years, according to a report from the Washington-based National League of Cities (NLC). NLC’s City Fiscal Conditions in 2008 report, released this week, predicted that, even if overall economic conditions improved now, cities could be reeling until 2010.
A key finding in the report is that cities are suffering not only from a continuing decline in property tax revenues (down 3.6 percent from the prior year, in inflation-adjusted terms), but a drop in other revenue, too, such as sales tax (down 4.2 percent) and income tax (down 3.3 percent in inflation-adjusted dollars). As a result, 64 percent of the city finance officers interviewed for the report said their cities would find it hard to meet their fiscal needs in 2008, and 79 percent said the struggle would be even harder in 2009. “Even if economic conditions improved immediately, the nation’s cities are likely to be realizing the effects of the current downturn through 2010,” said Michael Pagano, co-author of the report and dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago.
“The sharp decline in property tax receipts erodes a critical buffer that has helped cities through economic downturns for the last three decades.”
The entire report is available at