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Governing Magazine: Report - Cities' Fiscal Problems Run Long and Deep

The economies of America's major metro areas grew 2.5 percent in 2012, according to a report prepared by IHS Global Insight for the U.S. Conference of Mayors. That's good news, and it's a sign that cities are finally turning the corner economically. The bad news is that it has been an usually long and painful return for America's urban areas.

Looking at data from the nation's 30 largest cities, a new report from The Pew Charitable Trusts found that most cities hit their lowest revenue in 2010 or 2011, well past the low point for state governments in 2009. The reason for that lag has to do with property taxes, which are slow to respond to economic swings. "They delayed the early effects of the Great Recession for most of these cities," the report found. "The fiscal effects of this decline were compounded by increasingly unpredictable aid from state and federal governments." By the end of 2011, more than two-thirds of the cities still had not recovered to their previous revenue peaks.

The Pew report looks at the specific factors that led to the overall reductions in city revenues during the recession, keying in on two leading causes for declines in 20 of the 30 cities. Reductions in intergovernmental aid drove revenue down in 9 cities, while declines in small revenue sources -- like investment income, charges, fees and some taxes -- were the lead causes in 13 cities.

 Read the full article at Governing Magazine

American Cities Project

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