City officials optimistic on city financial health

Washington, D.C. — City officials are overwhelmingly feeling optimistic about the health and direction of local fiscal conditions for the first time since the recession, according to a new report from the National League of Cities. The 29th annual City Fiscal Conditions report shows that city revenues are showing the first positive growth in five years and cities are beginning to hire workers again.

City officials clearly believe cities are in better shape than at any point since the recession. But there are still questions over what the next few years will bring since the report also indicates that revenue is likely to be flat next year, with increases in: service costs, long-term infrastructure needs, and city pension and health care obligations, along with decreased federal and state aid.

“While we are very optimistic about the future, it is not without clouds on the horizon,” said Chris Coleman, Mayor of Saint Paul, Minn. “We know there are long-term challenges that will need a national commitment if cities are to succeed. They need a continued partnership with the federal government, with the state government, and with all of the residents of our cities. It requires that type of cooperation if we are to tackle the immense challenges posed by our aging and underfunded infrastructure.” 

When asked about the most impactful factors on their budgets, health of the local economy (81 percent) and value of the local tax base (73 percent) lead the pack as having the greatest positive influences. Infrastructure needs (52 percent), health benefit costs (51 percent) and pension costs (47 percent) weigh most negatively on city budgets. Although gradual economic recovery is stabilizing local budgets, these negative factors represent demands on local budgets that are likely to persist and hold back local budgets from full recovery for years to come.

“The report clearly shows that city finances are beginning to move in a positive direction,” said Clarence Anthony, Executive Director of the National League of Cities. He continued, “But growth is still happening at too slow a pace. It is imperative that Congress begin to prioritize investments in our communities.”

“Revenue projections for next year continue to show slow growth that remains susceptible to outside budget pressures,” said Christiana McFarland, Research Director of the Center for City Solutions and Applied Research at the National League of Cities. She continued, “Cities have not reached full recovery, and with uncertainty and lackluster economic growth, they continue to build their ending balances to ensure a financial cushion.”

NLC’s City Solutions and Applied Research team provides research and analysis on key topics and trends in cities, and provides city leaders with qualified information, innovative and proven solutions and assistance as they seek to improve their community’s quality of life.

NLC conducts the survey each year in partnership with the University of Illinois at Chicago's College of Urban Planning and Public Affairs, a nationally recognized innovator in education, research, and engagement in support of the nation's cities ad metropolitan areas. Michael A. Pagano, Dean of the College, has helped conduct the survey and author the report since 1991.

View the full report at www.nlc.org/cfc.