Federal Dysfunction Imperils Improving City Finances

A new report from the National League of Cities shows municipal revenues climbing across the U.S. in the aftermath of the worst economic crisis in decades. But pension and health costs, and federal budget issues, are causing concern.

October 11, 2013, 11am PDT | Jonathan Nettler | @nettsj

"Fiscal conditions are slowly improving for American cities, aided by increases in sales tax and income tax revenue, but rapidly rising pension and health costs for city workers continue to pose a potentially crippling threat, according to an annual study [PDF] released Thursday by the National League of Cities," reports Rick Lyman.

“Looking to 2014 and beyond, all indications point to improving conditions for city budgets, with national economic indicators pointing to continued slow growth,” the report concluded. “External factors, however, could easily undermine cautiously optimistic projections, including, most notably, the possibility of federal budget cuts.”

"The outcome of those external factors will have a major impact on whether cities can sustain this fiscal momentum," says Lyman.

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Cities Report Better Finances, but Worries Persist

Published on Thursday, October 10, 2013 in The New York Times