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Cities Struggling, But Not Raising Taxes

Falling tax revenues are a major element of the current economic woes facing many American cities. A recent study by the Pew Charitable Trust finds that few are increasing taxes in order to close budget gaps.

"Of 13 cities studied, just four - including Philadelphia - have proposed or enacted tax increases as a way of generating revenue and preserving services and jobs.

The study, from the Pew Charitable Trusts' Philadelphia Research Initiative, also found that Philadelphia falls somewhere in the middle in the size of its projected budget gap for next year, with a $428 million shortfall representing about 11 percent of its $3.8 billion budget.

Seattle was in the best fiscal shape of the cities studied, with a deficit amounting to 5 percent of the budget, while Detroit faces the toughest times, with a 20 percent shortfall.

Pittsburgh stood alone in having a small surplus, largely because of a government overhaul five years ago as a result of a previous financial crisis.

'We found that almost every city we studied has a significant budget problem on its hands, largely due to falling tax revenues, decreased state aid, and weakened pension funds,' said Larry Eichel, project director of the Philadelphia Research Initiative, created by Pew last fall. 'But the size of the problem varies dramatically from place to place, as do the strategies for dealing with it.'"

Full Story: Phila. among few big cities entertaining tax hikes

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