Research
Report
on
America’s Cities
City Fiscal
Conditions
in 2003
National League of Cities
Research
Brief
NLC’s “Research Reports” series consists of empirical studies about conditions
and policies in America’s municipalities. The series editor is William Barnes,
Director, Center for Research & Municipal Development, NLC.
Reports in this series include:
• Issues and Opportunities for University Communities: A Survey of Cities
• Our Future and Our Only Hope: A Survey of City Halls Regarding Children and Families
• A Survey of America’s City Councils: Continuity and Change
• State Mandates: Fiscal Notes, Reimbursement, and Anti-Mandate Strategies
• City Distress, Metropolitan Disparities and Economic Growth
• The State of America’s Cities, The Ninth Annual Opinion Survey of Municipal Elected
Officials
• All In It Together: Cities, Suburbs and Local Economic Regions
• City Fiscal Conditions in 1993
• Estimating Mandate Costs: Processes and Outcomes
• The State of America’s Cities, Tenth Annual Opinion Survey of Municipal Elected Officials
• City Fiscal Conditions in 1994
• Local Economics: The U.S. Common Market of Economic Regions
• School Violence in America’s Cities
• State of America’s Cities, 11th Annual Opinion Survey of Municipal Elected Officials
• The Impacts of Welfare Reform in America’s Cities and Towns
• City Fiscal Conditions in 1995
• Rural Workforce Development
• State of America’s Cities, 12th Annual Opinion Survey of Municipal Elected Officials
• City Fiscal Conditions in 1996
• Critical Needs, Critical Choices: A 1995 Survey of City Halls Regarding Children and Families
• State of America’s Cities, 13th Annual Opinion Survey of Municipal Elected Officials
• City Fiscal Conditions in 1997
• American Cities In The Global Economy: A Survey of Municipalities on Activities and
Attitudes
• Perspectives on Privatization by Municipal
Governments
• State of America’s Cities, 14th Annual Opinion Survey of Municipal Elected Officials
• City Fiscal Conditions in 1998
• Collaborating To Reduce Poverty: City Halls and Community-Based Organizations Working
Together to Revitalize Neighborhoods
• The State of America’s Cities, 15th Annual Opinion Survey of Municipal Elected Officials
• City Fiscal Conditions in 1999
• State of America’s Cities, 16th Annual Opinion Survey of Municipal Elected Officials
For ordering information on these or
other NLC publications, contact:
Publication Sales
National League of Cities
1301 Pennsylvania Avenue, N.W.
Washington, DC 20004-1763
(202) 626-3000
www.nlc.org
Research
Report
on
America’s Cities
City Fiscal
Conditions
in 2003
National League
of Cities
ii
Research
Report
City Fiscal Conditions in 2002
Table of Contents
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page i
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page iii
City Fiscal Conditions in 2003 . . . . . . . . . . . . . . . . . . . . . . .page 1
Appendices
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 21
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .page 25
iii
Copyright © 2004
National League of Cities
Washington, D.C. 20004
Research
Report
City Fiscal Conditions in 2003
Acknowledgements
The author would like to acknowledge the 328 respondents to this year’s
fiscal survey. The commitment of these cities’ fiscal officers to this project
is greatly appreciated.
Data entry was provided by the Survey Research Laboratory of the College
of Urban Planning and Public Affairs under the supervision of Jennifer
Parsons, Assistant Director for Research Programs.
Chris Hoene, Manager of Research and the Municipalities and Transition
Program at NLC, guided this research endeavor from the re-design of the
survey instrument through its administration phase and provided helpful
and useful commentary on the analysis.
Bill Barnes, Director of the Center for Research and Municipal Programs at
NLC, provided helpful comments about the survey instrument and the final
report.
Christiana Brennan, Research Assistant at NLC, provided additional
support in monitoring survey responses, conducting follow-up mailings and
phone calls, and editing the final report. Jill Thompson, a research assistant
in the Graduate Program in Public Administration at the University of
Illinois at Chicago, further cleansed the data base and provided much
needed technical assistance to the project.
Michael A. Pagano
November 2003
i
Research
Report
City Fiscal Conditions in 2003
Executive Summary
The struggling economy--combined with soaring health care and pension
costs, marked declines in state aid to local government, and other factors-is causing serious fiscal problems for America’s cities.
In the National League of Cities’ latest annual survey of city finance
directors, conducted by Michael Pagano, more than four in five
respondents (81%) said their cities were less able to meet financial needs
during 2003 than in the previous year.1 It was the highest negative response
to the question since the annual fiscal conditions survey first started asking
it in 1993.
Looking ahead, city officials are even more pessimistic, with 83 percent
saying they expect their cities would be less able to meet their 2004 needs,
relative to the current fiscal year.
Cities are responding to the deteriorating fiscal conditions in a variety of
ways. The most common response has been to raise fees and charges for
services, but cities also have been forced to reduce city employment and
service levels, as well as capital spending.
City Fiscal Conditions
Between the 2002 and 2003 NLC surveys, the share of city finance
directors reporting deteriorating fiscal conditions in their cities rose from
55 percent to 81 percent. The negative assessment of city fiscal conditions
in 2003 varied somewhat according to the size, location, and taxing
authority of the cities in the survey. For example:
•
Financial officers in cities that rely exclusively on the income tax were
more likely to report fiscal problems (97%) than those in cities that rely
exclusively on the property tax (79%) or the sales tax (80%).
•
A slightly higher percentage of respondents in the nation’s largest
(>300,000 population) and larger (100,000-299,999) cities (84% and
93%, respectively) reported being worse off in 2003 than in 2004,
relative to their colleagues in smaller (10,000-49,999) and medium-sized
cities (50,000-99,999) (80% and 78%, respectively).
•
Eighty-six percent of city officials in the Midwest reported
deteriorating fiscal conditions, compared to 82 percent in the West and
Northeast and 75 percent in the South.
These same trends held true when the finance directors were asked about
the ability of their cities to meet their financial needs in the upcoming fiscal
year.
iii
1 All references to specific years are for
fiscal years.
Research
Report
Factors Affecting Municipal Budgets
The survey presented city finance directors with a list of 18 factors that
could affect city budgets—everything from infrastructure needs to the
costs of employee pensions. Respondents were asked whether each of the
factors had “increased” or “decreased” between 2002 and 2003 and
whether the change had a positive or negative effect on the city’s overall
financial picture.
Leading the list of factors that increased over the previous year were
employee health benefits (cited as increasing by 85% of respondents) and
wages (cited by 81%). In addition, around seven in ten city officials cited
increases in infrastructure needs (69%) and public safety needs (71%).
Asked about the effect of these and other factors on city finances, more
than eight in ten respondents (83%) said employee health benefits were
having a negative effect. The next highest vote-getter in the negative
category was employee wages (74%), followed by public safety needs (66%),
infrastructure needs (65%), prices and inflation (63%), and employee
pensions (61%).
The health of the economy was cited as a negative factor by 50 percent of
city officials, while only 14 percent said it had a positive effect. At the same
time, more than six in ten respondents (62%) said the local tax base had a
positive effect on their ability to meet their cities’ overall needs, suggesting
that the continued strength of the real estate and property markets
provided a lifeline for city finances even as the economy turned sour.
When city officials were asked to identify three items that had “the most
negative impact” on their ability to meet city needs, the top vote-getters
were: costs of city workers’ health benefits (cited by 63% of respondents);
the costs of city workers’ pensions (30%); reduction in state aid (29%); the
strength of the local economy (25%); and infrastructure needs (25%).
Revenue and Expenditure Trends
Cities closed their 2002 books showing the largest negative gap between
revenues and expenditures since the survey began in 1985. City generalfund revenues increased by only 2.4% in 2002, while general-fund
expenditures increased by 5.5%. Cities’ 2003 budgets show general-fund
revenues growing by 3.8% and general-fund expenditures growing by 3.1%.
Property tax revenues were expected to increase by 4.0% in 2003, while
sales tax revenues were expected to remain flat and income tax revenues
were expected to grow by 1.8%.
iv
City Fiscal Conditions in 2003
City Revenue Actions. As in the past 16 years, the most common action
taken to boost city revenues during 2003 has been to increase fees and
charges for services. Almost half of all cities (47%) took this step,
including 56 percent of large cities and 57 percent of the largest cities; this
compares to 42 percent each of small and medium-sized cities.
In
addition, nearly three in ten cities (29%) imposed new fees and charges on
services, more than at any time since 1991.
In other revenue actions, just 17 percent of cities opted for increasing
property taxes; eight percent, in fact, reported decreases in property taxes.
Slightly less than one quarter of respondents (24%) said their cities
increased the number or level of impact fees.
Expenditure Actions. Three in five cities (62%) increased public safety
spending in 2003, while nearly two in five (38%) increased infrastructure
spending.
The most dramatic shifts in expenditure actions in 2003 relate to service
levels, capital and operating spending, and municipal employment. For
example, the share of cities that reduced municipal employment was 29
percent in 2003, up from just 12 percent in 2002. Similarly, the percentage
that reduced growth in operating spending rose to 25 percent in 2003 from
15 percent in 2002 and just five percent in 2001. Twenty-two percent of the
2003 respondents said their cities had reduced capital spending, compared
to just four percent in 1998, and 11 percent reduced service levels, up from
just three percent the year before.
Quarterly Tax Receipts. The City Fiscal Conditions Survey has tracked
quarterly tax collections from the 4th quarter of 2000 (October-December
Spotlight: City Reserve Funds in Decline
“Ending balances,” or reserve funds, offer cities a pool of dollars that can be used for a variety of purposes, including emergencies, natural disasters, and economic slowdown. It appears that many cities are dipping into these reserve
funds in response to the current fiscal challenges:
❏
Small cities have reduced their average ending balance from over $6 million in 2001 to $5.4 million in 2003.
❏
Respondents from medium-sized cities expected their cities to draw down reserves from $13.6 million in 2002
to $12.5 million in 2003.
❏
Among large cities, reserves were expected to decline from $36.4 million in 2002 to $31.9 million in 2003.
❏
The nation’s largest cities anticipated reducing ending balances to $74.1 million in 2003, compared to $95.4 million in 2001 and $80.9 million in 2002.
For the first time since 1992, ending balances declined as a percentage of expenditures in 2002, and they were budgeted to decline again in 2003.
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Research
Report
2000) through the 1st quarter of 2003 (January-March 2003), comparing
actual tax collections to budgeted amounts in each quarter. Property tax
receipts have largely met or exceeded projections, with actual receipts, on
average, eight percent higher than budgeted since October 2001. Actual
sales and income tax receipts have been lower than predicted, although
these receipts have been closer to projections in recent quarters. Tourist
taxes (lodging, restaurant, and amusement taxes) have consistently lagged
their budgeted amounts. Some of the mismatch between budgeted and
actual receipts was most likely attributable to the effects of 9/11,
particularly on tourism. However, tourist tax collections have remained
below projections in recent periods, suggesting finance officers had
expected the tourism industry to recover more than it actually did.
Conclusion
By any number of measures, cities are confronting increased fiscal stress.
According to city officials, revenue conditions are declining, largely as a
result of slow-growing or declining sales tax, income tax, and tourism tax
revenues. State budget deficits are resulting in reductions in state aid and
support as well. Meanwhile, pressures for increased expenditures are not
yielding. Municipal expenditures are increasing most in the areas of
personnel costs (wages, health care costs, and pensions), and in public
safety as municipalities cope with increased concerns about crime and
homeland security. Many city officials are subsequently making tough
decisions—reducing the municipal workforce, scaling back budgets,
reducing capital investment, raising fees and charges, and drawing down
reserves. The lone bright spots in the municipal fiscal picture are the
continued resiliency of the property tax, driven by robust real estate
markets, and cities preparations for the downturn through the development
of high ending balances (reserves). Despite these bright spots and recent
signs of economic recovery, city finance officers are overwhelmingly
pessimistic about fiscal conditions over the next year.
vi
City Fiscal Conditions in 2003
City Fiscal Conditions in 2003
Michael A. Pagano
University of Illinois at Chicago
The purposes of this study are to detail cities’ fiscal situations in 2003 and
over the past 18 years, to examine the effect of taxing authority and revenue diversity on revenue growth, to identify important factors affecting
cities’ ability to balance budgets, and to delineate policy actions taken by
cities in the past year that were designed to address their fiscal needs. 2
Overview of the Fiscal Environment
The fiscal environment for states and local governments has deteriorated
further than any of the previous three recessions. State fiscal analysts contend that states have not been in such a precarious fiscal position since the
Great Depression. The Federal government’s budgetary surpluses of just a
few years ago have now not only evaporated but the ensuing deficit for fiscal year 20043 is larger in monetary terms than any other.
The fiscal well-being of the federal government depends in large part on
the income levels of residents. Between 1992 and 2000, per capita income
increased on average 4.5% annually, according to the Bureau of Economic
Analysis. In 2001, the increase in per capita income slowed to 2.2% and then
to 1.7% in 2002. The national unemployment rate between 1997 and 2001
remained below five percent. In 2002, it increased to 5.8% and in 2003 it
has reached six percent or higher. The long bull market during the 1990s
also generated taxable capital gains resulting in an average annual increase
of 22 percent in federal revenue from a tax on capital gains, and substantial declines thereafter as the economy declined.
This unfortunate combination of slowing or stagnating per capita income,
declining capital gains, and increasing unemployment has put severe pressure on federal and state treasuries. The National Association of State
Budget Officers’ study of states’ fiscal conditions calculated states’ general-fund revenue growth in 2001 at 8.3%, dropping to 1.3% in 2002, and to
0.3% in 2002.4
City governments have also felt the effects of a struggling economy.
Although federal aid has fallen below five percent of city revenues, cities
have relied, and continue to rely, on state aid for a much more substantial
1
2 The data for this report were derived
from 328 respondents to a survey administered in May and June 2003 to all cities
with populations exceeding 50,000 and to
a sample of cities with populations
between 10,000 and 50,000. The response
rate was 31 percent (see Appendix A for a
discussion of the methodology). In this
report, the “municipal sector” refers to the
sum of all responding cities’ financial data
included in the survey. As a consequence, when reporting on general-fund
revenues and general-fund expenditures
for the “municipal sector,” it should be
noted that those aggregate data are influenced by the relatively larger cities that
have very large budgets and that deliver
services to a preponderance of the
nation’s cities’ residents. “Cities,” on the
other hand, refers to municipal corporations. Therefore, when averages are presented for “cities” (as opposed to the
“municipal sector”), the unit of analysis is
the municipal corporation. Average city
spending, for example, is equal to the sum
of each city’s average spending level
divided by the total number of responding
cities. Thus, the contribution of a small
city’s budgetary situation on the average
statistic is weighed equally to the contribution of a large city’s.
3 All references to years are for fiscal
years.
4 NASBO, Fiscal Survey of States, June
2003; http://www.nasbo.org
Research
Report
amount. Since the early 1980s, state aid has averaged approximately 20 percent of city total revenues. As states have experienced their own fiscal difficulties in the last two years, they have passed on some of the pain to their
municipalities. A study released by the National League of Cities in
September 2003 estimated that, in total, the decline in state aid to cities for
2003 is expected to exceed nine percent.5 The dramatic reduction in state
support for municipalities coupled with what is arguably one of the most
difficult economic and fiscal times for several decades or more conspire to
make the fiscal situation of cities in 2003 extremely difficult.
Because each level of government has access to a different mix of revenue
sources, a change in the underlying economic base of the nation will not
have the same impact on all levels of government. For example, a strong
housing market will most likely favorably effect a local government that is
highly dependent on the property tax for its revenues, to the extent there
are no regulatory impediments to the local government’s collection of such
tax revenue. But a strong housing market may have a very small positive
impact on a local government that relies on sales tax collections for its revenue. Because the federal government’s fiscal well-being is linked inextricably to the national income tax, any decline or stagnation in personal
income, including capital gains, is expected to be felt immediately and negatively. Immediately, because the loss of a job or a pay reduction is quickly translated into lower tax liability; negatively, because capital gains taxes
fueled much of the rapid revenue growth in the 1990s, which means its
evaporation since 2001 has triggered a rapid loss of revenues. States, on
the other hand, rely slightly more on sales tax revenues than on income
taxes. Local governments, including municipal corporations or cities, rely
more heavily on the property tax on average than on other revenues.
Property tax revenue growth does not reflect the immediate shifts and
changes in property values, due to infrequent real estate turnover and periodic reassessments of property values. Although school districts and
townships rely almost exclusively on the property tax for their general revenues, municipalities vary considerably in their reliance on the property tax.
To speak of an undifferentiated municipal sector is to ignore the differential revenue structures that have evolved over time and across states.
5 See Christopher Hoene and Michael A.
Pagano, “Fend-for-Yourself Federalism:
The Impact of Federal and State Deficits
on America’s Cities,” Government Finance
Review (October 2003): 36-42.
To illustrate the revenue impact of tax reliance, Figure 1 presents a “revenue
index” for the federal government, state governments, and municipalities
beginning in 1988, which is pegged to 100. The federal government experienced considerable and prolonged growth in revenues, especially since 1996,
until the economy slowed suddenly in 2001 and tax rates were reduced. The
index for the federal government’s Federal Fund for 2000 was 231, meaning
revenues grew 131 percent over their 1988 levels, but then dropped in 2001
to 222 and again in 2002 to 200 due to reductions in the income tax rate
2
City Fiscal Conditions in 2003
FIGURE 1:
Federal, State, and Municipal
General Fund Revenue Index
(1988=100)
and in taxable personal wealth. States also experienced robust growth until
2002.6 The index in 2002 for states was 204 or more than double the 1988
level. And although municipalities have experienced a slower overall growth
rate in revenue generation than states and the federal government since
1988, the index for municipalities’ General Fund increased from 179 in 2001
to 183 in 2002.
Although access to the property tax by municipalities is ubiquitous, their
revenue structures are anything but homogeneous. The revenue trendline
for municipalities in Figure 1 masks the influence of diverse revenue structures. Nearly all municipalities are granted a property tax authority by their
states, but authority to tax consumption (sales) or income is not universal.
For example, of the approximately 555 US cities with populations greater
than 50,000, roughly 34 percent have access to the property tax only,
eight percent have access to the income tax (in addition to having access
to the property tax), and nearly 58 percent have some retail sales-taxing
authority.7 Besides nearly universal access to the income tax by municipalities in Ohio, Pennsylvania, and Kentucky (and 24 or so in Michigan)
most other municipalities with an income tax authority tend to be among
a state’s largest (e.g., New York City, Kansas City, St. Louis) and are granted that authority by a special action of the state legislature.8
Sales tax authority is granted to some or all cities in 28 states. In
Oklahoma, cities’ general funds rely on the sales tax as the only source of
general tax revenues. In the other states, municipalities’ sales tax revenues
are supplemented with one or both of the other general tax revenues,
namely the property tax and, when permitted by state law, the income tax.
3
6 General Fund revenue data are not
tracked by NASBO, but expenditure data
are. These expenditure data are used as
reasonable estimates of General Fund revenue data.
7 Calculation by author. General taxing
authority derived from Appendix A,
Michael A. Pagano, City Fiscal Conditions
in 1999 (Washington, DC: National League
of Cities, 1999) and revised by the author.
8 “Local Income Taxes on Nonresidents in
the Nation’s 25 Largest Cities,” memorandum from Nonna Noto, Congressional
Research Service, March 12, 2002
(draft);Tracy Von Ins, “Some Cities Turning
to Local Income Taxes for Revenue,”
Nation’s Cities Weekly, July 9, 2001, p.1.
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Report
FIGURE 2:
General Fund
Revenue Composition for
the Municipal Sector, 2002
The predominant general tax revenue for some cities, then, is the property
tax (e.g., Milwaukee, Portland, Buffalo, Boston), for others it’s the sales tax
(e.g., Oklahoma City, Phoenix, Shreveport, Dallas), and for still others the
income tax (e.g., Columbus, Philadelphia, New York, Baltimore, Cleveland,
Louisville, Cincinnati).
The aggregate composition of municipalities’ General Funds is presented in
Figure 2. Although the property tax does represent the largest piece of the
General Fund pie (26%), the sales tax, the income tax, and “other” taxes
taken together amounted to even more than the property tax, reaching over
one-third of total municipal revenue.
Financial Officers’ Assessments
FIGURE 3:
Percent of Cities that Are
“Better Able/Less Able”
to Meet Financial Needs
This Year Than in Last Year
Cities’ Chief Financial Officers were asked whether their cities were better
able to address their financial needs in the current fiscal year (2003) than
in the preceding year (2002). They were also asked for the predictions of
the budgetary climate in the next fiscal year (2004). Last year (2002) was
the first time in ten years that more than half of the responding cities’ financial officers (55%) believed that their city was less able to meet financial
needs in the current fiscal year compared to the previous fiscal year. This
year the percentage rises to more the four-fifths of the responding cities’
financial officers (81%) who believed their city was less able to meet financial needs in the current fiscal year compared to the previous fiscal year
(Figure 3). This “negative” assessment is shown in more detail when the
cities are divided by taxing authority, size and region.
4
City Fiscal Conditions in 2003
FIGURE 4:
Percent of Cities That Are
“Better Able/Less Able”
to Meet Financial Needs
This Year Than In Last Year
By Taxing Authority for 2003
FIGURE 5:
Percent of Cities That Are
“Better Able/Less Able”
to Meet Financial Needs
This Year Than In Last Year
By City Size for 2003
FIGURE 6:
Percent of Cities That Are
“Better Able/Less Able”
to Meet Financial Needs
This Year Than In Last Year
By Census Region for 2003
a) taxing authority: financial officers in cities with access only to the property tax reported that their cities’ financial condition is in worse shape in
2003 than in 2002 in the same proportion to cities that have access only
to the sales tax (79% and 80%, respectively), but financial officers in cities
that only have access to the income tax reported a larger percentage (97%)
of cities being worse off (Figure 4);
b) population size: 80 percent of the nation’s small cities and 78 percent
of its medium cities reported being “less able” to meet financial needs in the
current year than in the previous year, while a slightly larger percentage of
the large and largest cities (84% and 93%, respectively) reported being
worse off in 2003 (Figure 5);
c) regional location: 86 percent of the nation’s Midwestern city officials
noted the deteriorating financial condition of their cities compared with a
somewhat smaller 75 percent of the nation’s Southern city officials (Figure
6).
5
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FIGURE 7:
Percent of Cities That Expect
to Be “Better Able/Less Able”
to Meet Financial Needs
Next Year (2004)
Than in Current Year
When asked their assessment of their cities’ ability to meet financial needs
the next fiscal year (2004) compared to the current fiscal year, the pessimism of city fiscal officers plummeted to its lowest levels since the question was first asked in 1993.Over four in five finance officers (83%) reported that their cities will be “less able” to meet financial needs in 2004 than
in this year (Figure 7). This assessment varied slightly by taxing authority
with 79 percent of sales tax cities, 87 percent of property tax cities, and 91
percent of income tax cities reporting that their fiscal condition would be
worse in 2004 than in 2003. This assessment of the future varied little by
city size (81-83% noting worsening conditions), except for a few more of the
nation’s largest city finance officers (89%) expected conditions in 2004 to
be worse than in 2003. However, 28 percent of the nation’s Southern cities
felt that their cities’ financial condition in 2004 would be better than it was
in 2003, while only seven percent of Northeastern cities, 12 percent of
Western cities, and 15 percent of Midwestern cities predicted a better fiscal
situation.
City Responses To The Fiscal Environment
A set of 18 factors that could affect municipal budgets was presented to
finance officers in the survey. They were asked to identify whether the factor had “increased” or “decreased” since 2002 and whether the change had
a “positive” or “negative” effect on the city’s fiscal profile. Figure 8 pres-
6
City Fiscal Conditions in 2003
ents the results. Employee wages and health benefits increased in over 8
of 10 (81% and 85%, respectively) responding cities, and almost 7 in 10
responding city officials identified increases in infrastructure needs (69%)
and public safety needs (71%). While 15 percent of the respondents indicated that the health of the local economy increased, 45 percent indicated
that it had decreased. In addition, 67 percent noted that the city tax base
has increased during the past year – only seven percent noted a decrease.
On a personnel issue, 61 percent of responding city officials indicated that
costs associated with employee pensions increased over the previous year.
One in five indicated that education needs (20%) had increased over the
previous year. While 17 percent noted that federal aid had increased and
13 percent noted that state aid had increased over the previous year, 27
percent noticed a decrease in federal aid and 51 percent indicated a drop in
state aid. Roughly one-third (31%) noted that federal environmental mandates had increased, while 27 percent noted an increase in state environmental mandates.
Survey respondents were then asked their assessments as to whether those
factors in Figure 8 had a “positive” or “negative” impact on the city’s budgetary capacity to meet city needs. Figure 9 presents the results. “Employee
health benefits” topped the list of “negative” impacts with 83 percent of
7
FIGURE 8:
Change in Selected Factors
in FY 2003
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Report
FIGURE 9:
Impact of Selected Factors
on FY 2003 Budgets
and Their Ability to Meet
Cities’ Overall Needs
responding city officials citing it as a negative factor; close behind was
“employee wages” at 74 percent. Other “negative” impact factors included
public safety needs (66%), infrastructure needs (65%), prices and inflation
(63%), and employee pensions (61%). The “health of the local economy” was
cited by 50 percent of city officials as having had a “negative” impact on
the budget, and it was also cited by 14 percent of city officials as having
had a “positive” impact. Six in ten city officials (62%) noted that the “city’s
tax base” had a positive impact on their ability to meet cities’ overall needs,
while only ten percent noted that it had a negative impact.
An interesting paradox continues from the previous year from a reading of
Figure 8 and Figure 9. There appears to be a disconnect between the fiscal officers’ assessment of the change in their city’s tax base (67% registered an “increase” in the tax base and 62% noted that the impact was
“positive”), while a much smaller 15 percent stated that the “economic
health” of the underlying economy had increased. Yet, more than 4 in 10
city officials (45%), on the other hand, concluded that their cities’ “economic health” had decreased and 50 percent noted that the impact was
negative. In other words, while the tax base appears to have expanded
since the last fiscal year, the city’s economic health apparently did not
improve. One reason for this seemingly ambiguous response may be that
8
City Fiscal Conditions in 2003
the real estate and property markets have remained strong during the
recession, even as employment, income, retail sales, and other elements of
the local economy have not performed as well.
When finance officers were asked to identify the three items that have had
“the most negative impact” on the cities’ ability to meet city needs, the
trend from the previous year continues (Figure 10). First, while the importance and impact of “health benefits” has remained the same since 2002, it
is still at the top of the “most negative factors” list. At 63 percent of
responding cities identifying “health benefits” as one of the three “most
negative” factors affecting their budgets, it is much more pronounced as a
negative factor than any of the other factors listed on the survey.
Surprisingly, the importance of the performance of the local economy was
not cited by more finance officers in 2003 than in 2002 as one of the three
FIGURE 10:
Percent of Cities Reporting Item
Has Had Among the Most
Negative Impacts on Budget
most negative factors affecting the city budgets with only 25 percent of
city finance officers identifying it. Infrastructure needs declined in importance in 2003 compared with earlier years, identified by 25 percent of
finance officers as among the three most negative factors. While “infrastructure needs” and the “health of the local economy” have been declining relative to other factors, two other factors have surpassed them as having the “most negative impact” on cities’ ability to meet city needs in 2003.
The amount of “state aid” was identified by 29 percent of respondents as
among the three “most negative” factors, and “employee pensions” was
chosen by 30 percent of the respondents as the “most negative impact”
affecting their city government in 2003.
9
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FIGURE 11:
City Revenue Actions,
1987-2003
Revenue Actions 2002
The most common revenue action taken by cities in 2003 and in the previous 16 years was to increase fees and charges for services (Figure 11).
Almost half of the cities (47%) increased levels of fees and charges (Figure
12). Over half of the nation’s large and largest cities (57% and 56%, respectively) raised user fees, and a slightly smaller percentage of small and medium (42% each) cities raised user fees (Table 1, page 12). The change in property taxes has been less with only 17 percent of cities increasing property
taxes and eight percent reporting decreases in property taxes. Slightly less
than one-quarter of all responding city officials increased the number or
level of impact fees (24%) with 30 percent of large cities taking this action
and only 21 percent of medium and small cities taking the action. Almost
3 in 10 city officials reported that their city increased the number of other
fees or charges (29%), 44 percent of the largest cities adopted this revenue
action while only 22 percent of the medium cities adopted the action.
Municipal Tax Rate Increases
Prior to 1995, the net revenue effects of states’ adjusting their tax rates had
been positive, meaning that more revenue was collected than would have
been collected had the states not adjusted their tax rates. Between 1995
and 2002, states reduced tax rates to such an extent that it generated $33
billion in tax relief. In 2003, states once more decided to raise tax rates.
9 National Association of State Budget
Officers, Fiscal Survey of States, June
2003 http://www.nasbo.org
City officials were asked to report whether tax and fee rates were
increased, decreased, or maintained over the past year. Respondents were
10
City Fiscal Conditions in 2003
FIGURE 12:
Revenue Actions in 2003
also asked to estimate the revenue-raising potential for each fiscal policy
action. As a result of raising and lowering tax and fee rates, net tax and fee
revenues in the responding cities were expected to increase by $283 million
over the previous year. This estimate excludes new money generated as a
result of natural increases in tax revenues due to a growing tax base or
more efficient revenue collection methods. It includes net changes in revenue that are a direct result of increases and decreases in tax rates, a conscious fiscal policy decision of city officials.
This tax and fee increase divided by the total number of inhabitants of all
the responding city officials (53,983,860 people in 328 responding cities)
yields an average increase in taxes of $5.26 per city resident. The Bureau
of the Census estimates that approximately 135 million people live in municipalities with 10,000 or more inhabitants (as of 1997). Multiplying this number by the average amount of per capita tax and fee increases ($5.25) yields
approximately $708 million of increased municipal sector tax revenues as a
result of net changes in tax and fee rates in 2003 (Figure 13).
FIGURE 13:
Net Revenue Effects of
Changes to State and Municipal
Tax Rates and Fees
11
Research
Report
TABLE 1
Actions That Cities Have Taken
During the Last 12 Months
12
Expenditure Actions
TOTAL
Largest
Cities
Large
Cities
Medium Small
Cities
Cities
Increased public safety spending
Increased infrastructure spending
Increased growth rate of operating
spending
Increased human service spending
Reduced size of city workforce
Improved productivity levels
Reduced growth rate of operating
spending
Increased size of city workforce
Reduced infrastructure spending
Increased interlocal agreements
Increased contracting out services
Increased city service levels
Reduced city service levels
Decreased human service spending
Increased education spending
Decreased education spending
Decreased public safety spending
Reduced contracting out services
Reduced productivity levels
Reduced interlocal agreements
61.6
37.8
65.6
25
64.5
34.2
60.8
42.2
59.3
39.8
38.7
33.5
29.3
28.4
31.3
28.1
56.3
37.5
35.5
35.5
30.3
36.8
42.2
39.2
24.5
22.5
39.8
28.8
25.4
25.4
24.7
23.2
21.6
16.8
16.2
12.8
11
10.7
9.5
7.6
6.7
4
2.1
1.2
28.1
9.4
37.5
9.4
25
6.3
25
18.8
15.6
9.4
9.4
3.1
0
0
27.6
26.3
23.7
23.7
21.1
19.7
11.8
2.6
10.5
5.3
3.9
5.3
3.9
0
24.5
28.4
17.6
15.7
18.6
11.8
7.8
14.7
9.8
8.8
4.9
3.9
2.9
2.9
22
20.3
19.5
15.3
8.5
11
9.3
10.2
6.8
2.5
9.3
3.4
0.8
0.8
Revenue Actions
TOTAL
Largest
Cities
Large
Cities
Medium Small
Cities
Cities
Increased level of fees/charges
Increased number of other fees or
charges
Increased number/level of impact or
development fees
Increased property tax rates
Reduced property tax rates
Increased rates of other taxes
Increased tax base
Increased sales tax rates
Reduced tax base
Increased number of other taxes
Reduced rates of other taxes
Reduced number/level of impact or
development fees
Reduced sales tax rates
Reduced number of other fees or
charges
Increased income tax rates
Reduced income tax rates
Reduced level of fees/charges
Reduced number of other taxes
47
56.3
56.6
42.2
42.4
28.7
43.8
32.9
21.6
28
23.5
16.5
8.2
7.6
6.1
4.3
3.4
3.4
1.8
25
15.6
12.5
6.3
0
9.4
9.4
3.1
9.4
30.3
18.4
2.6
10.5
6.6
3.9
1.3
2.6
0
20.6
16.7
8.8
8.8
2
2
2
5.9
2
21.2
15.3
10.2
5.1
11
5.1
4.2
1.7
0.8
1.2
1.2
0
0
0
0
2
2
1.7
1.7
1.2
0.6
0.6
0.6
0.3
0
0
6.3
0
0
0
1.3
0
0
0
2
1
0
0
0
1.7
0
0
1.7
0.8
City Fiscal Conditions in 2003
Expenditure Actions 2002
FIGURE 14:
Expenditure Actions in 2003
Three in five cities (62%) increased public safety spending in 2003 (Figure
14). Over one-third of all responding cities increased infrastructure spending (38%) and the growth rate in their operating budgets (39%). Based on
the data in Table 1, the nation’s medium-sized cities increased infrastructure
spending and the growth rate in operating spending more than other cities.
Only 23 percent of the cities that responded increased the size of the city
workforce, compared to 38 percent reporting an increase in 2002. Only 13
percent of cities increased city service levels, 16 percent increased contracting out services, 28 percent improved productivity levels, and 17 percent increased inter-local agreements (all with little variation in these
actions based on city size or location).
13
FIGURE 15:
City Expenditure Actions,
1987-3003
Research
Report
Figure 15 presents city responses to questions on expenditure actions since
1987. The most dramatic expenditure-action shifts in 2003 pertain to service levels, capital and operating spending, and municipal employment. The
action “reducing municipal employment” surged to 29 percent of all cities
from 12 percent in 2002. The percentage of city officials that identified
“reducing the growth rate in operating spending” rose to 25 percent from
last year’s level of 15 percent and is five times higher than 2001 levels of five
percent. Capital spending was reduced 22 percent of the responding cities,
up from four percent in 1998. And service levels were reduced in 11 percent
of cities, the highest since 1994.
FIGURE 16:
Change in General Fund
Revenues and Expenditures
(current dollars)
The action “reduced growth rate of operating spending” showed notable
variation based upon city size in 2002, but there was little variation based
on city size this year (Table 1, page 12). The action “reduced growth rate of
capital spending”, on the other hand, displayed notable variation based on
city size in 2003. Only 18 percent of the nation’s medium cities reported a
reduction in the growth rate of capital spending, while a much larger 38
percent of city officials from the nation’s largest cities reported this same
action. Variation by city size in the “reduced size of city workforce” action
was also significant. Although only 29 percent of total city officials reported this action, over half (56%) of city officials in the largest cities reported
this action, but only one-quarter of the nation’s small (25%) and medium
(25%) cities reported this action, and slightly more large (30%) cities reported the action.
14
City Fiscal Conditions in 2003
Growth in Revenues/Expenditures & Ending Balances
Between 1986 and 2002, year-to-year growth in General Fund revenue had
been generally strong, reaching 6.2% as recently as 2000. In 2002, however, revenue growth slowed to only 2.4%, as shown in Figure 16. General Fund
expenditure growth between 1986 and 2002, excluding 1993, had also been
quite strong. Indeed during the decade of the 1990s (1991 through 2001),
revenue growth averaged a robust 4.4% while expenditure growth averaged
4.3%. In 2002, expenditure growth reached 5.5%. The resulting gap
between revenue and expenditure growth (3.1% -- the difference between
5.5% expenditure growth and 2.4% revenue growth) is the largest in the history of the survey. However, the national recession that began in 2000 and
the national concern about public safety and homeland security after the
9/11 attacks on New York City and Washington, DC have created a seemingly different fiscal environment, which is better depicted by examining the
constant-dollar values of General Fund revenues and expenditures over the
past decade.
Figure 17 deflates revenues and expenditures by the State and Local
Government index calculated by the Bureau of Economic Analysis for the
National Income and Products Account. Applying the index to the data
from Figure 16 provide a perspective on the real value of revenues and
expenditures for municipalities. In 2001 and 2002, cities increased their constant-dollar spending by 3.3% and 4.3%, respectively, even as their constant-dollar revenue growth remained quite low at 0.7% in 2001 and 1.2% in
2002. Cities have budgeted for a significant decline in the growth rate in
spending for 2003, dropping to 1.0% over the 2001 levels, according to survey respondents. And finance directors are predicting revenue growth for
2003 will climb to 1.6%, which, if true, would be a higher growth rate than
cities have experienced since 1999.
15
FIGURE 17:
Change in General Fund
Revenues and Expenditures
(constant dollars)
Research
Report
The aggregate average growth in revenues, however, masks enormous variation across cities. For example, Gillette (WY) increased revenues in 2002
by almost 20 percent (from $170 million to $208 million), but then expected revenues in 2003 to drop back to $152 million. Cincinnati, a city that
relies on income tax revenues (including a commuter tax) to provide 60 percent of its total general-fund revenue, has seen a steady erosion in its general-fund revenues from $331million in 2001 to $317 million in 2002 and then
to $307 million in 2003. Sunnyvale’s (CA) general-fund revenues dropped
from $118 million to $101 million between 2001 and 2002, then to $92 million
in 2003. On the expenditure side, Huntington Beach (CA) cut general-fund
spending between 2001 and 2002 by $136 to $119 and then increased it to
$127 in 2003. San Francisco and Detroit, meanwhile, raised spending levels
between 2001 and 2002 by nearly nine percent; in 2003, Detroit budgeted
for spending levels to decline by over $200 million below 2002 levels.
FIGURE 18:
Year-to-Year Change in General
Fund Tax Receipts
Variation in revenue growth is expected to depend in part on a city’s access
to general tax structures. Cities that rely on a sales tax will most likely
experience sharp upswings during economic growth years and sharp downturns during recessionary periods. Property taxes, because of their relative
stability over time, will not respond as rapidly as sales or income taxes to
changes in underlying economic conditions. Figure 18 charts the year-toyear growth in sales, property and income tax receipts to the general fund.
Between 1996 and 2000, the average annual growth rate in sales tax collections exceeded that of both the property tax and income tax. As the
recession--which began with the slowdown in the stock markets in 2000-took hold, general-fund sales tax receipts actually declined from the previous year in both 2001 and 2002. Property tax collections during the same
time period grew at a much slower, albeit fairly strong, rate, and continue
to show signs of a very robust real estate market in 2001 and 2002. The
budgeted property tax growth in 2003 is four percent, while sales tax collections in 2003 are not expected to exceed the 2002 level.
16
City Fiscal Conditions in 2003
Ending Balances
Ending balances, or “reserve funds,” offer cities a pool of funds that can be
used for a variety of purposes, including for emergencies, natural disasters,
and economic slowdowns. Cities can draw down these reserves to maintain
service delivery levels during the lean years, and they can build them up as
a “savings account” during the strong years. Figure 19 presents the average
ending balance for cities grouped according to their population size. The
small cities (population between 10,000 and 50,000) have reduced their
average ending balance from over $6 million in 2001 to $5.4 million in 2003.
The nation’s medium-sized cities (population between 50,000 and 100,000)
increased average ending balances in 2002 to $13.6 million, but are expected to draw down reserves in 2003 to $12.5 million. The nation’s large cities
(population between 100,000 and 300,000) also increased reserves ever so
slightly from 2001 to $36.4 million in 2002, but expect to draw them down
to $31.9 million in 2003. And the nation’s largest cities (over 300,000, but
excluding New York City) reduced ending balances from $95.4 million in
2001 to $80.9 million in 2002 and to $74.1 million in 2003. (New York City’s
ending balances have hovered around $400 million for the three years,
compared to a budget of $46 billion.)
FIGURE 19:
Average Ending Balance
by City Size
It might appear that all cities’ ending balances as a percentage of expenditures, except for the nation’s largest cities, might have been getting larger
during 2002. However, expenditure growth of 5.5% actually reduced the
ending balance as a percentage of expenditures. Figure 20 presents the historical picture of municipalities’ ending balances as a percentage of expenditures from 1985 through the current budget year, 2003. For the first time
since 1992, ending balances as a percentage of expenditures have declined
in 2002 and are budgeted to decline again in 2003.
17
Research
Report
FIGURE 20:
Ending Balances as
a Percentage of Expenditures
(General Fund)
The Bear Market Lingers
If city officials were anticipating a decline in certain revenues, one would
expect forecasts to capture those declines. Indications that the economy
was cooling down were well-known by late 2000 and early 2001 and that
the trough of the business cycle was going to extend well into 2003.
Finance directors were asked to provide quarterly budgeted and actual
data for four revenue sources beginning in the 4th Quarter of 2000
(October-December 2000). These results were released last year in the
2002 Fiscal Conditions Report. The latest survey requested quarterly budgeted and actual data for an overlapping six-quarter period, beginning with
the 4th Quarter 2001 and continuing through the 1st Quarter 2003.
Specifically, the 2003 survey requested city officials to provide quarterly
budgeted and actual collections of (1) property tax revenues, (2) sales tax
revenues, (3) lodging, restaurant, amusement, and other tourist-related tax
revenues, and (4) income tax revenues for the six quarters beginning with
October 1, 2001 and ending March 31, 2003.
Figures 21 and 22 illustrate the accuracy of forecasting in the six quarters
of the first period (2000-2002) compared to the second period (20012003). An examination of the figures leads to at least three observations.
First, property tax receipts have been quite close to budgeted property tax
revenues in the first period, but under-forecast in the second. The strong
performance of the real estate markets, driven by the lowest mortgage
interest rates in 40 years, apparently has surprised even the finance directors. Actual receipts were, on average, eight percent higher than budgeted
during the Oct 2001 through March 2003 period.
18
City Fiscal Conditions in 2003
Second, actual sales tax receipts and income tax receipts during the second period (October 2001-March 2003) were much closer to the budgeted
or predicted collections than they were during the first period (October
2000-March 2002), although in this second period they still are lower. This
suggests that finance officers had expected retail sales and wages/salaries
to have picked up slightly more than they actually did.
Finally, cities’ “tourist taxes” continue to lag their predicted amounts. In the
first period, some of the mismatch between actual tourist tax receipts and
budgeted amounts might have been attributable as much to the effects of
9/11 as to the deteriorating economy. During the second period, however, it
appears that finance officers had expected the tourist industry to pick up
more than it actually did, resulting in tourist tax collections falling almost
seven percent below budgeted amounts.
FIGURE21:
Six-Quarter Forecast Accuracy
4th Quarter 2000 through 1st
Quarter 2002
FIGURE22:
Six-Quarter Forecast Accuracy
4th Quarter 2001 through 1st
Quarter 2003
19
Research
Report
Conclusion
By any number of measures, cities are confronting increased fiscal stress.
According to city officials, revenue conditions are declining, largely as a
result of slow-growing or declining sales tax, income tax, and tourism tax
revenues. State budget deficits are resulting in reductions in state aid and
support as well. Meanwhile, pressures for increased expenditures are not
yielding. Municipal expenditures are increasing most in the areas of personnel costs (wages, health care costs, and pensions), and in public safety
as municipalities cope with increased concerns about crime and homeland
security. Many city officials are subsequently making tough decisions—
reducing the municipal workforce, scaling back budgets, reducing capital
investment, raising fees and charges, and drawing down reserves. The lone
bright spots in the municipal fiscal picture are the continued resiliency of
the property tax, driven by robust real estate markets, and cities preparations for the downturn through the development of high ending balances
(reserves). Despite these bright spots and recent signs of economic recovery, city finance officers are overwhelmingly pessimistic about fiscal conditions over the next year.
20
City Fiscal Conditions in 2003
Appendix A: Methodology
This 2003 report on city fiscal conditions is based on a national survey of finance
officers in U.S. cities during May and June 2003. Survey data for this report are
taken from the 328 city officials that responded to the mail survey, for a response
rate of 31 percent (see Appendix B for a list of all responding city officials), allowing us to generalize for all cities with populations over 10,000.
In May and June 2003, NLC sent surveys to all cities with populations greater than
50,000 and, using established sampling techniques, to a randomly generated sample of 507 cities with populations between 10,000 and 50,000. Questionnaires
were mailed to 1,059 cities. Respondents had a choice to enter the data on line
with a secure password or they could enter the information on the paper survey
form. Paper surveys were returned to the Survey Research Laboratory, College of
Urban Planning and Public Affairs, University of Illinois at Chicago, 412 South
Peoria Street, Chicago, IL 60607, where they were compiled and coded and the
data were put into computer-readable format (see Appendix C).
The number of usable responses totaled 328, for a response rate of 31 percent.
The response rate was higher for larger cities than for smaller cities. 32 of the 57
largest cities (>300,000 population), or 55 percent, responded as did 76 of 178
cities, or 43 percent, in the larger city category (100,000-299,999 population).
Almost a third (32%) of the medium-sized cities (50,000-99,999 population)
responded, or 102 of 316. And 118, or 23 percent, of the remaining cities that were
sent surveys returned the form. Cities that responded to the survey are listed in
Appendix B. The responses received allow us to generalize about all cities with
populations of 10,000 or more. Due to lower response rates from smaller cities
and cities in the Northeast (14% response rate), any conclusions regarding cities
remain tentative.
Population groupings in this report are based on Census data. The “largest” cities
are defined as those with populations of 300,000 or more; “large” cities have
between 100,000 and 299,999; “medium” cities have between 50,000 and 99,999;
and “small” cities have populations of 10,000-49,999.
City
Populations
Number of Cities
in This Class
Number of
Surveys Sent
Numbers
Returned
>300,000
100,000-299,999
50,000-99,999
10,000-49,999
58
178
316
2,079
58
178
316
507
32
76
102
118
55.2%
42.7%
32.3%
23.3%
TOTAL
2,631
1,059
328
31.0%
21
Response Rate
Research
Report
It should be remembered that the number and scope of governmental functions
influence both revenues and expenditures. For example, many New England cities
are responsible not only for general government functions but also for public education. Some cities are required by their states to assume more social welfare
responsibilities than other cities. Some assume traditional county functions. Cities
also vary according to their revenue-generating authority. Some states, notably
Kentucky, Michigan, Ohio and Pennsylvania, allow their municipalities to tax earnings and income. Other cities, notably those in Colorado, Louisiana, New Mexico,
and Oklahoma, depend heavily on sales tax revenues. Moreover, state laws may
require cities to account for funds in a manner that varies from state to state.
Therefore, much of the statistical data presented herein must also be understood
within the context of cross-state variation in tax authority, functional responsibility, and state laws. City taxing authority, functional responsibility, and accounting
systems vary across the states.
The dollar amounts presented in this report are in either current or constant dollars. Nominal dollars are deflated using the state and local government implicit
price deflators.
The survey asked for the following statistical data for fiscal years ending in 2001,
2002, and 2003: FEDERAL AND STATE AID; REVENUE COMPOSITION of the
city’s General Fund (property tax revenue, sales tax revenue, income tax revenue,
other local taxes, fees and charges, state funds, federal funds, all other revenue);
LONG-TERM G.O. DEBT OUTSTANDING and LONG-TERM REVENUE DEBT
OUTSTANDING; PRINCIPAL AND INTEREST PAYMENTS ON G.O. DEBT; COMBINED FUNDS BUDGET; and CAPITAL SPENDING. The survey also asked for
financial data for 2001-02 on the amount of ADDITIONAL CITY REVENUE the
city generated during the past year as a result of raising tax rates and of raising
fees and charges.
City finance officials were also asked to provide data on their city’s GENERAL
FUND. The General Fund is the largest and most common fund of all cities. The
following were requested:
Beginning balance: These are the resources with which the city’s General Fund
begins the year. If the city’s General Fund were a personal checking account, this
would be roughly equivalent to the balance carried forward from the previous
month.
Revenues (and transfers in): This is the grand total of all taxes, fees, charges, federal and state grants, and other monies deposited into the General Fund. While
revenues are generally recurring items, the “transfers into general fund” also
lumped into this item probably are not. These transfers occur when, for a variety
of reasons, a city brings funds from one of its other specialized funds into the
General Fund.
22
City Fiscal Conditions in 2003
Expenditures (and transfers out): This is the total of all spending by the city’s
General Fund and may include both operating and capital spending. Transfers out
of the General Fund to other funds are also included here.
Ending balance: This is defined as the resources with which the city’s General Fund
is left at the end of the year. The ending balance of one year becomes the beginning balance of the next. The ending balance is easily calculated as: Beginning
Balance + Revenues – Expenditures = Ending Balance
Reserves: This is defined as the portion of ending balances that cities have earmarked for a capital project or for any other purpose, rendering those funds
unavailable for genera- purpose spending.
Cities were also asked to identify which of a list of 19 possible fiscal policy actions
were taken during the 12 months prior to receiving the survey (May 2002 through
May 2003), how many of a list of 18 factors inhibited or helped the city’s ability to
balance its budget, what three factors most adversely affected city revenues and
city expenditures, what three factors most positively affected city revenues and
city expenditures, whether the city is better able or less able to meet its financial
needs in 2003 compared with the previous year, and whether the city will be better able or less able to meet its financial needs in 2004 compared with 2003.
For this report, regional analysis is based on the Bureau of the Census’ definition
of regions:
NORHTEAST
MIDWEST
SOUTH
WEST
Connecticut
Maine
Massachusetts
New Hampshire
New Jersey
New York
Pennsylvania
Rhode Island
Vermont
Illinois
Indiana
Iowa
Kansas
Michigan
Minnesota
Missouri
Nebraska
North Dakota
Ohio
South Dakota
Wisconsin
Alabama
Arkansas
Delaware
District of Columbia
Florida
Georgia
Kentucky
Louisiana
Maryland
Mississippi
North Carolina
Oklahoma
South Carolina
Tennessee
Texas
Virginia
West Virginia
Alaska
Arizona
California
Colorado
Hawaii
Idaho
Montana
Nevada
New Mexico
Oregon
Utah
Washington
Wyoming
23
Research
Report
24
City Fiscal Conditions in 2003
Appendix B: Responding Cities
Auburn
Dothan
Huntsville
Selma
Fort Smith
Little Rock
North Little Rock
Chandler
Flagstaff
Lake Havasu City
Mesa
Peoria
Phoenix
Scottsdale
Tucson
Yuma
Berkeley
Burbank
Camarillo
China
Chula Vista
Monterey Park
Claremont
Diamond Bar
Escondido
Fairfield
Folsom
Fontana
Foster City
Fullerton
Hayward
Hermosa Beach
Huntington Beach
Irvine
La Mesa
Lakewood
Lodi
Los Alamitos
Los Angeles
Los banos
Los Gatos
Lynwood
Mill Valley
Milpitas
Montebello
Moreno Valley
Mountain View
Palmdale
Palo Alto
Pasadena
Pleasant Hill
Pleasanton
Porterville
AL
AL
AL
AL
AR
AR
AR
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
AZ
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
Rancho Cucamonga
Redondo Beach
Rialto
Riverside
Rosemead
Salinas
San Diego
San Francisco
San Marcos
San Marino
Santa Clara
Santa CLarita
Santa Maria
Seaside
Simi Valley
South San Francisco
Stockton
Sunnyvale
Thousand Oaks
Torrance
Tustin
Upland
San Buenaventura
Vista
Watsonville
Whittier
Windsor
Arvada
Boulder
Brighton
Commerce City
Denver
Lakewood
Longmont
Louisville
Pueblo
Thornton
Ansonia
Branford
Bridgeport
Chesire
Killingly
Groton
Groton City
Cape Coral
Clearwater
Greenacres
lakeland
Largo
Melbourne
Miami
Palm Bay
Pembroke Pines
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CA
CO
CO
CO
CO
CO
CO
CO
CO
CO
CO
CT
CT
CT
CT
CT
CT
CT
FL
FL
FL
FL
FL
FL
FL
FL
FL
Pompano Beach
Sarasota
Tallahassee
Tarpon Springs
Wellington
West Palm Beach
Albany
Columbus
Macon
Savannah
Honolulu
Boone
Iowa City
Ottumwa
Sioux City
Bloomingdale
Bloomington
Bolingbrook
Deerfield
Des Plaines
East Moline
Evanston
Glendale Heights
Lake Zurich
Mount Prospect
Naperville
Oak Lawn
Oak Park
Orland Park
Peoria
Rolling Meadows
Schaumburg
Skokie
Springfield
Wheaton
Woodridge
Anderson
Carmel
Knoxville
Manhattan
Olathe
Overland Park
Parsons
Topeka
Jefferson Town
Owensboro
Alexandria
Baton Rouge/
East Baton Rouge
Eunice
Lake Charles
Slidell
Beverly
FL
FL
FL
FL
FL
FL
GA
GA
GA
GA
HI
IA
IA
IA
IA
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IL
IN
IN
IN
KS
KS
KS
KS
KS
KY
KY
LA
LA
LA
LA
LA
MA
25
Research
Report
Brookline
Cambridge
Lynn
Aberdeen
Battle Creek
Cadillac
Dearborn Heights
Detroit
Farmington
Ferndale
Lansing
Mt Pleasant
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Port Huron
St. Clair Shores
Sterling Heights
Albert Lea
Austin
Bemidji
Bloomington
Burnsville
Fridley
Minneapolis
Moorhead
New Brighton
Saint Paul
Belton
Hazelwood
Independence
Kansas City
Kirksville
Liberty
Moberly
St. Joseph
Great Falls
Cary
Charlotte
Durham
Havelock
High Point
Lexington
Monroe
Raleigh
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Edison
Haddonfield
Hamilton
New Providence
Old Bridge
Albuquerque
Henderson
Las Vegas
26
MA
MA
MA
MD
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MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
MI
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MN
MN
MN
MN
MN
MN
MN
MN
MN
MO
MO
MO
MO
MO
MO
MO
MO
MT
NC
NC
NC
NC
NC
NC
NC
NC
NC
NE
NE
NH
NJ
NJ
NJ
NJ
NJ
NJ
NM
NV
NV
Reno
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Springfield
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Baytown
Beaumont
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NV
NY
NY
NY
NY
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
OH
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OK
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OK
OK
OK
OK
OK
OR
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OR
OR
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PA
PA
PA
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RI
SC
SC
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TN
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TN
TN
TN
TN
TX
TX
TX
TX
TX
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Brownsville
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Cedar Hill
College Station
Coppell
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Dallas
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El Paso
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Garland
Houston
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University Park
Waco
Layton CIty
Ogden
Pleasant Grove City
Provo
Salt Lake City
Sandy
Chesapeake
Newport News
Norfolk
Richmond
Roanoke
Virginia Beach
Bellevue
Bellingham
Everett
Federal Way
Kelso
Shoreline
Tacoma
Brookfield
Brown Derr
Greenfield
Kenosh
Manitowoc
Mequon
New Berlin
Oak Creek
Sun Prairie
Gillette
Green River
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
TX
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TX
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UT
UT
UT
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VA
VA
VA
VA
WA
WA
WA
WA
WA
WA
WA
WI
WI
WI
WI
WI
WI
WI
WI
WI
WY
WY
About the National League of Cities
The National League of Cities (NLC) is the oldest and largest national
organization representing municipal governments throughout the United
States. NLC serves as a national resource and advocate on behalf of
over 1700 member cities and for 49 municipal leagues whose membership
totals more than 18,000 cities and towns across the country.
The mission of the National League of Cities is to strengthen and promote cities as centers of opportunity, leadership, and governance.
National League of Cities
1301 Pennsylvania Avenue, NW
Washington, DC 20004
www.nlc.org