City Budget Shortfalls and Responses: Projections for 2010-2012

Source: Christopher W. Hoene, Research Brief on America’s Cities, Issue 2009-4, December 2009

From the press release:
National League of Cities recently released a new report projecting the municipal sector will face budget shortfalls combined with cuts in state aid to range between $56 billion and $83 billion over the next three years. Federal investment through a jobs package would help stabilize city budgets allowing cities to save and create local, public and private sector jobs.

In addition to budget shortfalls due to declining sales, income, and property tax revenue collections, the NLC report indicates municipal budget shortfalls are also increasing due to cuts in state assistance to local governments. Many cities are receiving almost no assistance from state governments, and in some cases states are recapturing that assistance to reduce their own budget gaps.

In response to continuing declining economic conditions and the prospect of budget shortfalls, cities are laying off staff, delaying or canceling infrastructure projects, and making cuts to public safety services. Together, these measures can have devastating impacts on the employment level in local communities and leave a deep and lasting impact on the national economy. Local budget cuts could result in 600,000 public and private sector job losses in 2010 and another 900,000 in 2011. One in seven cities is beginning to cut public safety services, usually only done as a last resort.

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