NLC Report Finds Fiscal Conditions of U.S. Cities Strengthening

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Posted: Monday, October 17, 2016 8:57 pm | Updated: 6:27 pm, Wed Oct 19, 2016.

WASHINGTON, D.C. -- The National League of Cities released its 31st annual City Fiscal Conditions Report, finding that after a slow recovery from the Great Recession, the fiscal conditions of U.S. cities are strengthening. Based on a nationwide survey of city finance officers, improved fiscal health in 2016 was driven by improvements in the value of the tax base and better-than-anticipated revenue growth.

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," said National League of Cities 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."

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."

With more than 30 years of historical data, the City Fiscal Conditions Report surveys city finance officers on their cities' abilities to meet fiscal needs, factors impacting budgets, tax receipts, and revenue and spending trends and provides a context for how current fiscal conditions compare with previous recession and recovery periods.

The full report is authored by Christiana McFarland, research director at NLC's Center for City Solutions and Applied Research, and Michael A. Pagano, dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago.

The report findings were broadcast at a special release event in Washington at National League of Cities' new headquarters.

SOURCE: National League of Cities

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