Report: Two Thirds of Big Cities Predict Recession, Midwest in Fiscal Decline

WASHINGTON – October 28, 2019 – Today, the National League of Cities (NLC) released its annual report, “City Fiscal Conditions,” at an event in Washington. The report, which analyzed survey results and fiscal data from over 500 cities, finds increasing fiscal uncertainty and trends similar to those that emerged at the start of previous economic downturns.

Key findings from this year’s report include:

• General fund revenues slowed to their lowest annual growth rate since 2013.
• For the first time in seven years, cities anticipate a decline in revenue as they close the books on fiscal year 2019.
• Declining fiscal conditions are sharpest in the Midwest as overall general fund revenues in cities there declined by 4.4 percent.
• Property tax receipts are showing signs of weakening, notably in the Midwest.
• Spending growth has outpaced revenue growth in recent years, and we expect this trend to continue.
• Two thirds of big cities predict a recession will hit in 2020 or 2021.
• Yet, three out of four local finance officers remain confident about the ability of their cities’ budgets to meet the financial needs of their communities

“For the first time in 34 years, we took a closer look at fiscal trends by region and city size to get a more complete picture of what different communities are facing on the ground,” said Clarence Anthony, CEO and Executive Director, the National League of Cities (NLC). “It is clear that communities across the country — and their residents and businesses — are experiencing varying economic realities. My hope is that local leaders continue to use this report to improve communications and outcomes within their own budget processes, and ultimately, to better support the needs of the people they serve.”

The City Fiscal Conditions survey is a national email survey of finance officers in U.S. cities conducted from May to July of each year. Officers were asked to report on local fiscal policies, budget pressures and revenue and expenditure data and to give their assessments of their cities’ fiscal conditions. In addition, budget data for 200 of the largest cities were collected directly from online city budget documents. In total, the 2019 data were drawn from 554 cities and yielded a response rate of 40 percent. The data allow for generalizations about the fiscal conditions in cities.

“City fiscal conditions are a reflection of underlying economic factors,” said Christiana McFarland, research director at NLC and report author. “While many local economies are healthy, global economic disruptions are starting to make an impact on fiscal health, particular in the Midwest.”

The report is available for download here.