Officials are overwhelmingly optimistic about the health and direction of local fiscal conditions for the first time since the recession, according to the National League of Cities’ 29th annual City Fiscal Conditions. The report confirms the first positive growth in five years, coupled with resumption of hiring among League members.
Survey respondents clearly believe cities are in better shape than at any point since the recession, but questions remain over what the next few years will bring. The report indicates that revenue is likely to be flat in 2015, concurrent with increases in service costs, long-term infrastructure needs, plus city pension and health care obligations—in tandem with decreased federal and state aid.
“While we are very optimistic about the future, it is not without clouds on the horizon,” says St. Paul (Minn.) Mayor Chris Coleman. “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, state government and 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 shows that city finances are beginning to move in a positive direction,” says National League of Cities Executive Director Clarence Anthony. “But growth is still happening at too slow a pace. It is imperative that Congress begin to prioritize investments in our communities.”
The National League of Cities report can be viewed at www.nlc.org/cfc.