In its 31st annual City Fiscal Conditions report, the National League of Cities (NLC) finds that fiscal conditions of U.S. cities are getting stronger. This improvement is taking place after a slow recovery from the Great Recession. This conclusion is based on a national survey of city finance officers. Improvements in the value of the tax base and better-than-anticipated revenue growth is driving the more robust fiscal health in 2016, according to the report.

These improvements are allowing cities to reinvest in city services, namely public safety, and to make greater investments in infrastructure. Although cities are better able to meet the day-to-day fiscal needs of their communities, revenues have not yet reached pre-recession levels and city budgets continue to confront mounting challenges.

“Long-term budget concerns like pensions and infrastructure are on the minds of city leaders,” says NLC president Melodee Colbert-Kean, councilmember, Joplin, Mo. “For now, city fiscal conditions are showing signs of vitality, with local leaders using tax dollars to reinvest in areas critical to communities.” Some highlights from the report:

–General Fund revenues grew 3.73 percent in 2015, and are budgeted to grow 0.54 percent as cities close the books on 2016. Expenditures grew 3.57 percent in 2015 and are budgeted to increase 3.71 percent in 2016.

–Property tax revenue growth is returning to pre-recession levels, with a sizable increase of 3.77 percent in 2015 and anticipated growth of 2.6 percent in 2016.

–Sales tax revenues are continuing to post strong growth, with 5.49 percent in 2015 and 1.99 percent expected in 2016.

–Despite post-recession volatility, income tax revenues grew 5.82 percent in 2015 and are expected to grow 3.47 percent in 2016.

–Ending balances are returning to pre-recession highs, standing at 24.48 percent of General Fund expenditures in 2015 and budgeted for 21.67 percent of expenditures in 2016.

“The uncertainty in the economy will continue to test city fiscal conditions,” said NLC’s Research Director Christiana McFarland. “But this year’s survey paints a fuller picture of how our nation’s cities have repositioned themselves and their fiscal health in recent years.”

Go here for details.

GPN will post its 2017 Keating Report forecast on government budgets and spending in the near future at the GPN site. Go here for the first part of the mid-year 2016 Keating Report.

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