The nation’s cities are cutting personnel and infrastructure projects as the economic downturn continues to take its toll on city finances, according to the National League of Cities' (NLC) 26th annual City Fiscal Conditions report.
The report reveals that general city revenues are continuing to fall, with a projected 2.3% decrease by the end of 2011. This is the fifth straight year of declines in revenue with probable further declines in 2012.
The revenue decline is mainly due to the suppressed property market that is negatively impacting property tax revenue. Property tax collections are expected to decline by 3.7% with further declines likely in 2012 and 2013.
Cities are responding by cutting personnel (72%), delaying infrastructure projects (60%) and increasing service fees (41%). One in three (36%) cities report modifications to employee health care benefits.
"The cuts in personnel and the delaying of infrastructure projects are prudent and responsible actions by local officials," said Donald J. Borut, executive director of NLC. "City officials are making difficult decisions and are working hard to find innovative solutions to re-energize their communities. But without more resources and more cooperation, the outlook will continue to be challenging."