Cities cutting costs, raising fees

The worst recession in 70 years is crushing American cities. As municipal officials across the country try to make ends meet, they anticipate laying off more employees, cutting services, and shelving more projects. 

LOS ANGELES, CA (Catholic Online) - It seems like an anti-prescription to the recession, just the thing this country needs the least, but without money, tough choices must be made. The recession is putting millions out of work and that means less revenue for city budgets.

Surveys reveal that more than half of U.S. cities have cut staff, cancelled projects, or raised fees to cover their costs this year. 

Cities have been hit on two fronts as some of their largest revenue generators have lost power. The first major revenue source is  property taxes. With declines in housing values and foreclosures on the rise, cities have not been able to collect property taxes as they did just a few years ago. Second, falling revenues from depressed sales taxes, the result of a sharp decline in consumer spending, means that cities are being squeezed tightly--just as demands are increasing.

Health care and pension costs have been rising steadily. Those benefit costs have been made worse, not better, as a result of massive layoffs. As cities layoff employees, they have fewer people to pay into their benefit systems. 

Cities, in addition to saying they've cut services or raised fees, as many as 20% say they have cut spending on public safety.
 
At first, the problems were confined to those cities that were hardest hit by early unemployment and housing bubbles. But now, cities across the nation are reported widespread difficulties in financing their operations. There are a few exceptions. Cities in places like Texas and Oklahoma, where the rise in energy prices has meant more income instead of less, are still doing well. 

The future doesn't look good either. Economists forecast that housing prices will remain low. And property taxes lag well behind the market, so even a turnaround in housing can take as long as a year to manifest itself in the city's coffers. 

The jobs outlook isn't much better. 

For now, cities will continue to make cuts and pinch pennies. The troubles aren't over and won't be for a long time to come. 

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