Cities Make Broad Cuts As Revenue Declines

A study by the National League of Cities says how the economic recession has finally started to hit cities as property- and income-tax have decreased. Cities are balancing their budgets through layoffs, canceled construction projects or raised fees.

September 28, 2011, 2pm PDT | Kristopher Fortin

High unemployment, ailing housing market and weak consumer spending have reduced taxes for cities for five straight years, reports Daniel Wagner for the Associated Press.

"As states' tax collections fell during the recession, they responded by cutting aid to cities, school districts and localities. Those cuts are expected to peak next year, according to research by the Center for Budget and Policy Priorities cited by the league's report.

"Public education is especially hurt because many school districts are funded about half by states and half by property taxes, said Michael Leachman, the center's director of state fiscal policy."

Cities that rely most on property tax revenue have been hit the hardest.

"Many are in the Northeast, Hoene said. By contrast, Midwestern cities tend to have steeper income taxes. And cities in the West, South and Southeast typically rely more on sales-tax revenue."

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Many cities imposing broad cuts as revenue shrinks

Published on Tuesday, September 27, 2011 in Associated Press