The National League of Cities (NLC) 31st annual City Fiscal Conditions report finds 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, Missouri. "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% in 2015, and are budgeted
- to grow 0.54% as cities close the books on 2016. Expenditures grew 3.57% in 2015 and are budgeted to increase 3.71% in 2016.
- Property tax revenue growth is returning to pre-recession levels, with a sizable increase of 3.77% in 2015 and anticipated growth of 2.6% in 2016.
- Sales tax revenues are continuing to post strong growth, with 5.49% in 2015 and 1.99% expected in 2016.
- Despite post-recession volatility, income tax revenues grew 5.82% in 2015 and are expected to grow 3.47% in 2016.
- Ending balances are returning to pre-recession highs, standing at 24.48% of General Fund expenditures in 2015 and budgeted for 21.67% 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 over 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.