City Budget Woes

City budgets are only now feeling the weight of the recession.  Overall city revenues declined in fiscal 2009 for the first time since 2002 (see chart below).

As bad as the last fiscal year was–with overall city revenues down 0.4% while expenses were up 2.5%–the Wall Street Journal reports that “city officials expect steep drops in tax collections in the next two years, making for the worst outlook in the 24 years the [National League of Cities] has been surveying its members. Western cities were particularly downbeat.”

The article goes on to add that “Because employee wages, health care and pensions are a major component of municipal budgets, two-thirds of the cities reported hiring freezes or layoffs.”

It is getting pretty hard to know what policy makers and economists mean when they speak of economic recovery.



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