Tuesday, December 7, 2010
One danger of the continuing downturn is that it becomes a permanent economic correction. This would likely mean a fundamental reconfiguring of city budgets--a shrinking bottom line that would result from decreased buying (reduced sales tax revenue) and decreased real estate values (reduced property tax revenue).
Implicit in such a change would be a reduction in public planning and development expenditures.
A recent Citiwire article outlines the challenge:
Cities’ revenues will plunge sharply as property taxes, in their first year of recession-impacted reassessments, get set to decline deeply in 2011. Local government fiscal shortfalls may total $83 billion, which the League of Cities estimates may force up to 500,000 staff reductions. Basic city services will shrink. Infrastructure projects will get cancelled or postponed.
These are hard times for America’s local governments. Economists may declare the Great Recession is “over,” but localities see a different picture. The federal stimulus monies that helped so many of them balance their budgets runs out December 31. So does Washington’s two-year old “Build America” bond program, which has made local infrastructure borrowing more affordable.
Read the entire article, here.
Chad Emerson, Faulkner