Out of Control Policy Blog

Citiesí financial mess

Cities continue to flounder in financial messes of their own making. They continue to spend more than they have, and the most common response is a predictable one–raising existing taxes or cooking up new ones.

Here's the ugly snapshot:

[According to a survey of 328 cities by the National League of Cities] more than four out of five finance directors surveyed (81%) said their cities were less able to meet financial needs compared with the previous year, the largest proportion since 1990.

Spending increases outpaced revenue increases in cities' 2002-2003 fiscal year by 3.1 percent compared to the previous year ...

City finance officers said the biggest negative factors affecting budgets were:
? Costs of city workers' health benefits (cited by 63 percent),
? Costs of city workers' pensions (30 percent),
? Reduction in state aid (29 percent),
? The local economy (25 percent), and
? Infrastructure needs (25 percent).

In response to the deteriorating fiscal condition of cities:
? Nearly half (47 percent) of all cities increased fee rates in 2003,
? 30 percent reduced city employment,
? 29 percent imposed new fees or charges on services,
? 21 percent reduced actual levels of capital spending, and
? 11 percent reduced city service levels.

Ted Balaker is Producer

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