A survey released by the National League of Cities says most U.S. cities face worsening fiscal situations, and local governments will have to cut personnel or stop new projects over the next few years. Three out of four city officials claim overall economic and fiscal conditions have gotten worse this past year, with over 90% expressing concern about unemployment and increased joblessness in their communities. More than six in 10 report that poverty has intensified. The survey also found that 71 percent of cities have cut personnel and 68 percent have had to delay or cancel infrastructure projects.
“City budget shortfalls will become more severe over the next two years as tax collections catch up with economic conditions,” the report said. “These will inevitably result in new rounds of layoffs, service cuts, and canceled projects and contracts.”
Nationally the gross domestic product was up 3.2% in the first quarter of this year and thousands of jobs have been created in the last three months but this is not reflected at the local level yet as Local and state economies take more time to recover from a recession. This is because the demands for public assistance rise just as tax revenue falls.
The city of Central Falls, Rhode Island, needed help to restructure their debt after state budget cuts, weak revenues and the increasing cost of pension benefits for its workers. They were placed in a temporary receivership on Wednesday. Also Philadelphia passed a budget which will lay off 300 people, and the mayor of Washington, D.C., said their proposed budget cuts “will devastate an already under-resourced city.”
The National League of Cities, which advocates for 19,000 cities, towns and villages, said, “Many cities have also taken more unprecedented measures such as cuts to public safety, reductions in health-care benefits and revisions to union contracts.”
“Unfortunately for cities, the fiscal difficulties they are facing appear likely to continue beyond the current year,” the report found.