Cities Still Cutting Jobs and Infrastructure

For the sixth straight year, city revenues around the country dropped in 2011, as costs of health care, pensions and infrastructure rose, says a public administration and infrastructure expert at the University of Illinois at Chicago.

Michael Pagano, dean of the UIC College of Urban Planning and Public Affairs and co-author of the National League of Cities’ annual report on fiscal conditions, wrote that reductions in state and federal aid have severely eroded cities’ bottom lines.

“Difficult, but manageable, financial hurdles for cities will remain for the foreseeable future. These are serious times for cities and their residents,” Pagano said.

The league’s survey of city finance officers showed that cities are cutting personnel and services, and delaying or canceling infrastructure projects. Forty-three percent have raised fees to help replace lost revenue.

The researchers project that property tax revenues will fall for the third consecutive year, by 2.1 percent, as housing markets remain stagnant; income tax revenues are expected to drop by 0.8 percent as high unemployment continues; and looming federal budget cuts will continue to challenge city budgets in 2013.

The report notes signs of slow improvement, however, 43 percent of city finance officers say they are less able to meet city needs than they were last year. This number is down from 57 percent in 2011, 87 percent in 2010, and 88 percent in 2009.

One bright spot mentioned in the report is sales tax revenues, which rose slightly in 2011, and are projected to continue to rise by 2.4 percent in 2012.

Pagano noted that amounts cited in the report are in constant dollars, and that revenue declines pertain only to cities’ general funds, which cover most cities’ basic operations such as public safety, transportation and administration.

The National League of Cities represents 19,000 cities, towns and villages. Since 1991, Pagano has helped conduct its annual survey of fiscal conditions and issue its report.

The full report can be accessed online.

UIC ranks among the nation’s leading research universities and is Chicago’s largest university with 27,500 students, 12,000 faculty and staff, 15 colleges and the state’s major public medical center. A hallmark of the campus is the Great Cities Commitment, through which UIC faculty, students and staff engage with community, corporate, foundation and government partners in hundreds of programs to improve the quality of life in metropolitan areas around the world.