Report shows cities’ improved fiscal outlook, lagging infrastructure funding

Sources: National League of Cities, Washington, D.C.; CP staff

Officials are optimistic about the health and direction of local fiscal conditions for the first time since the recession, according to the National League of Cities (NLC), whose 29th annual City Fiscal Conditions report confirms the first positive growth in five years, coupled with members’ resumption of hiring.

Although mayors and city managers believe their governments are in better shape than at any point since 2008, they question what the next few years will bring: The report indicates revenue is likely to be flat next year, 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 NLC City Solutions and Applied Research team analyzes key topics and trends of consequence to local governments, providing leaders with qualified information, innovative and proven solutions, and assistance as they seek to improve residents’ quality of life. The League surveys members annually in partnership with the University of Illinois at Chicago’s College of Urban Planning and Public Affairs; Dean Michael A. Pagano has helped conduct the survey and author the City Fiscal Conditions report since 1991. The 2014 edition can be viewed at