12 January 2010

Looming Fiscal Problems for US Cities

On the PBS News Hour today (12 January 2010), there was a report of the financial situation of states around the nation. There are many states that are having significant budget problems that will have an effect on public services in cities around the nation. “Under the radar” is the budget problem for cities. In September 2009, the National League of Cities stated” In the face of declining revenue and increasing expenses, city finance officers are pessimistic about cities’ abilities to meet their financial needs. Nine in ten (88%) say this year will be difficult in meeting fiscal needs, while 89% expect the same in 2010. This is the worst outlook the report has detailed in 24 years (http://www.nlc.org/PRESSROOM/PRESSRELEASEITEMS/CFCSept2009PR9.1.09.aspx ) ".
This will inevitability result in decreased services, hiring freezes, laying off of public employees, privatization, and increased taxes. A League of Cities report, City Fiscal Conditions in 2009, documents fully the impending crisis (http://www.nlc.org/ASSETS/E0A769A03B464963A81410F40A0529BF/CityFiscalConditions_09%20%282%29.pdf ) The economic problems of cities is directly related to the main source of their revenue, property and sales taxes states the report. While we bailed out banks for trillion of dollars, should not some been left over to bail out states and local governments? The Federal Government is considering taxing banks. It would be appropriate that some of this revenue could be used to lessen the burden being soldered by states and local government, which was caused by recklessness of banks. Nevertheless, this are “stop gap” solutions. Efforts must be taken by bodies such as the National League of Cities and “think tanks” to investigate how cities can lead the economic recovery. The obvious key to this situation is to bring about a healthy housing market, and improve the job market. However, other solutions that would be geared toward reorienting the role of the US cities within the global market (such as developing green oriented technologies, encouraging urban cultural economies). It is recognized that the US is one of the most creative societies in the world. It is time for all levels of government to consider this crisis as an opportunity to re-gear in a different direction and entertain innovation.

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