State of the Cities Report 2014

Share of cities reporting an improved ability to meet financial needs increases

The 2014 State of the Cities Report presents findings from the 11th annual fiscal conditions survey. The survey was sent to the chief administrative official in each member city. City officials responded to the 2014 survey from Dec. 11, 2013, through Jan. 11, 2014. A total of 411 cities returned the survey for a response rate of 49 percent.

State of the Cities overview
The proportion of cities that reported an improved ability to meet financial needs increased for the fourth year in a row, from 51 percent in 2012 to 71 percent in 2013. This is the greatest share since the League began surveying cities in 2003. “Better able” may not always mean that financial conditions are good, but rather that the city is better able to address fiscal challenges than in the prior year, regardless of how difficult those challenges may be. A slightly larger share of cities, 73 percent, predicted an easier time meeting needs in 2014.

The share of cities reporting a shortfall in 2013 fell or stayed the same across all revenue sources. For the first time since 2007 fewer than half of responding cities reported a shortfall in property tax revenue.

Budget factors
The proportion of cities reporting an increase in the value of the tax base rose in 2013. This growth continues an upward trend first observed last year. The share reporting a decrease in value fell below 50 percent. While little difference was observed in most budget factors when compared to 2012, the percentage reporting increases in factors related to employee costs rose slightly in 2013. The percentage reporting a change in the health of the local economy supports the notion of improving conditions. Larger shares reported an increase or no change compared with 2012 while a smaller share reported a decline in local economic health.

Strategies to prepare for 2014
Cities were asked to identify the strategies they used in 2013 to prepare for the next year. The majority of cities reported using at least one strategy; the average city utilized 2.06 strategies. The portion of cities taking action in each category fell in 2013. How a city responds to fiscal challenges is dependent on several factors, and not every strategy is available to or appropriate for every city. Cities may need to change their strategy or mix of strategies as conditions change in order to meet needs most effectively.

If you have questions about the 2014 State of the Cities Report, contact Rachel Walker or Lena Gould (see information at right).

Read the current issue of the Cities Bulletin