Property Tax Revenue Downturn Hurting Cities

"Even as the economy makes what appears to be tentative recovery, local revenues are continuing to drop. The reason is that property taxes - the main source of local tax dollars - are typically readjusted over several years. That means assessments are just starting to reflect diminished home values, which have come down by 30 percent on average nationwide since the housing market's peak in 2006."

Many of the country's major cities are facing large budget shortfalls over the coming years. Contributions to municipalities from the federal and state levels are also expected to decrease.