Cities Brace for a Prolonged Bout of Declining Tax Revenues

[Craftsman]

By LESLIE EATON

The recession is finally hitting city budgets, with overall city revenues inching down in fiscal 2009 for the first time since 2002, according to a report to be released Tuesday by the National League of Cities.

Weak growth in property taxes, reflecting soft housing prices, did not counterbalance sharp declines in other sources of income, including sales taxes, income taxes and state aid, according to a survey of 379 league member cities.


Overall city revenues declined by 0.4%, even as expenses rose 2.5%, and city officials expect steep drops in tax collections in the next two years, making for the worst outlook in the 24 years the group has been surveying its members. Western cities were particularly downbeat.

The gloomy mood "is indicative of the depths of the downturn, that they have the worst ahead of them, and the fact that the recession is universally hitting their revenue sources," said Chris Hoene, research director for the league.

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