Revenue Growth for Cities Forecast to Slow in 2017

New research from the National League of Cities suggests a potential slowdown in municipal revenue as fiscal growth in American cities contracts for the second straight year.

The findings from the report, “City Fiscal Conditions 2017,” indicate a trend last seen in 2006, before the recession. Among the concerns are slowing local revenue, insufficient post-recession revenue recovery and waning confidence of city finance officers.

“Our findings raise cautionary flags, despite improvements in economic indicators, like productivity and unemployment,” said Christiana McFarland, director of research at Washington, D.C.-based National League of Cities.

General fund and revenue is projected to stagnate, with just 0.9% growth in 2017, after increasing by 2.6% last year.

Finance officers have budgeted for a 1.6% gain in property tax revenue in 2017, compared with 4.3% last year.

Finance officers project a decline in 2017 in sales and income tax revenue (by 0.2% and 2.7%, respectively). Those categories increased last year by 3.7% and 2.4%, respectively.

Although the majority of finance officers (69%) are confident in the fiscal position of their cities, optimism hit its peak in 2015.

“City Fiscal Conditions” has been published annually by the National League of Cities since 1986 and provides a window into the health of cities across the country, and it helps local officials be realistic about the tools that are available to them.

The report was released this week in Washington at a roundtable event featuring elected officials, city leaders, analysts, economists and practitioners.

The National League of Cities is an advocacy organization serving as a resource and advocate for more than 19,000 cities and towns.