Fiscal Stress Pervasive in Nation's Cities, State Budget Crises Not Helping

Three-quarters of the nation's cities surveyed by the National League of Cities (NLC) report they are less able to meet their financial needs this year than they were a year ago. This is a sharp increase over the 55 percent of cities that said they were less able to meet financial needs in last year's survey by NLC, the oldest and largest national organization for American cities. The preliminary survey results are based on initial responses from officials in 145 cities to NLC's State of America's Cities Survey on Fiscal Conditions, conducted in February 2003.

Factors contributing to the worsening financial picture in cities include a decrease in aid from state governments. More than one-third of the surveyed cities (36 percent) said the decrease in state funds is the largest source of revenue decline in their cities. At the same time, most cities (81 percent) report they increased spending on public safety in 2003.

To deal with tightening budgets, 63 percent of the cities report that they are raising fees for services or creating new fees in 2003, compared to 42 percent in 2001. Fifty-six percent said city reserves are being drawn down in comparison to only 24 percent in 2001.

Looking ahead, 74 percent of cities said they would be even less able to meet their cities' financial needs in the coming year and 54 percent expect their local economies to be weaker next year.

NLC held a summit March 7-11 in recognition of the fiscal crisis facing governments at all levels, which marked the survey's unofficial release. Full results of the NLC survey are expected to be available by April 24. A fact sheet highlighting the survey's preliminary findings will be available at http://www.nlc.org.