Keating Report: Mid-year 2015 forecast on government budgets and spending—Part 1

Budgets are looking better as the second half of 2015 starts, say local government officials. They see healthier budgets and spending that is growing a little. More than four out of five administrators (88.6 percent) see their government’s budgets in the second half of 2015 equal to or greater than second half 2014 budgets, according to an exclusive E-survey of readers of Penton magazines Government Product News and American City & County. This year’s budget optimism outlook measure is a couple of percentage points higher than what our readers told us in the mid-year 2014 E-survey.

A total of 307 city/county, state and federal officials answered the question about mid-year 2015 budget trends. About 91 percent of the survey respondents are city or county government officials.

GPN reached out to local governments to find out how municipal budgets are trending as we start the second half of 2015. The economy in New Bedford Mass., is slowly improving, says Mayor Jon Mitchell (photo to the right). “New Bedford’s economy is gaining momentum, with the city’s major businesses adding jobs and our unemployment rate continuing to decline. We are seeing  significant growth in cargo handling in our port, and our commercial fishing industry remains the most profitable in the U.S.”
The mayor notes, however that New Bedford’s economic growth is only just beginning to result in significant appreciation in property values and growth in city revenue sources. That slow growth, says the New Bedford mayor, “will constrain the city’s budget until this dynamic changes.”

As the second half of 2015 starts, Allentown, Pa., Mayor Ed Pawlowski (photo below on left) tells GPN: “Our one of a kind Neighborhood Improvement Zone has created a billion dollars in new or planned development downtown and jobs are flowing into the city. A concession lease of our water and sewer utility system has stabilized the city budget. That is cause for great optimism.

The mayor tells GPN, however, that he is keeping a sharp eye on events in Harrisburg and Washington, D.C. “The battle over the state budget is expected to have tremendous impact on the school district budget which is a huge concern for city taxpayers. In my discussions with my colleagues across the country, needed infrastructure improvements are always a part of the conversation and that requires a long-term funding partnership with the federal government.”

The GPN mid-year 2015 survey results match up with findings from Lexington, Mass.-based economic forecaster IHS Global Insight (IHS) on the topic of budget growth and planned government spending. IHS predicts that government purchases of goods and services will grow from $3.21 trillion in 2015 to $3.29 trillion in 2016. In 2014, government purchases totaled $3.18 trillion, say IHS economists.

Federal Budget Trends

Federal government purchases of goods and services have remained steady, say IHS Global Insight forecasters. Uncle Sam is on target to spend the following on goods and services, according to new IHS estimates:

Year    Value of purchases

2014   $1.22 trillion

2015   $1.23 trillion

2016   $1.24 trillion

In future Keating Report mid-year 2015 installments, read about state and local government budget trends as well as the mid-year 2015 government and public works construction outlook.

Michael Keating (photo at right) is senior editor for American City & County and the GPN web site. Contact: michael[email protected]

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