Report: Cities’ revenues continue falling

Revenue in the nation’s cities continues to fall for the sixth straight year in 2012, according to a new report, as declining tax receipts combined with state and federal aid cuts weigh heavily on cities’ bottom lines. The City Fiscal Conditions report from the National League of Cities (NLC) says municipal governments are cutting personnel, delaying or canceling infrastructure projects and reducing some services to stretch tight budgets.

The report, conducted annually, queried city finance officers. It found that cities’ general fund revenues in 2011 declined 2.3 percent from 2010 revenues. Looking to the close of 2012, city finance officers project that general fund revenues will decline by 3.9 percent from last year.

City tax revenues presented a mixed picture, according to the report. Property tax revenues, a major source of funding for many cities, are projected to fall for the third year in a row in 2012, dropping 2.1 percent. But sales tax revenues, which started creeping up in 2011, are projected to continue to rise by 2.4 percent in 2012.

Many cities are taking steps to close budget gaps. Forty-three percent, according to the report, have raised fee levels, while 48 percent have reduced their workforce. Twenty-five percent have cut services such as parks and libraries.

The report showed some signs of improvement. Forty-three percent of city finance officers say their cities are less able to meet financial needs in 2012 than in 2011. That is an improvement from last year’s survey when 57 percent of finance officers said their city was less prepared to meet its needs, and considerably better than the 88 percent who said that in 2009.

Still, the report’s researchers said 2013 will likely present continued financial challenges for most cities, even if the economy improves. That is because city revenue collections, from property taxes and other sources, lag economic transitions such as improving housing or job markets.