2009 State of the Cities Report details impact of recession
(April 29, 2009—St. Paul, Minn.) The nation’s economic recession, the decline in the housing market, and the recent crisis in the financial market have negatively affected city finances in a variety of ways, according to a new study released today by the League of Minnesota Cities. The 2009 State of the Cities Report shows that all of those trends have hampered the ability of Minnesota cities to fund and provide basic services to residents and businesses. The Report includes findings from a survey that was administered to 831 League member cities at the end of 2008. A total of 445 cities responded.
According to the Report, the most frequently identified problems among respondents as a result of the general economic downturn are an increase in unpaid residential utility bills, an increase in unemployment among residents, a decrease in building permit revenues, and an increase in unpaid property taxes. All of these factors affect city revenues and the ability to finance city services, like public safety and public works. Additionally, just over one third of cities reported an increase in requests for deferred payments and/or bills over the last year and more than 26 percent of cities reported that there has been an increase in business closures in their communities.
Respondents identified the most frequent foreclosure-related problems as delinquent utility services fees and taxes and collection of delinquent utility bills, property maintenance issues, delinquent property tax payments, and declining property value. Problems created by foreclosures strain city budgets as demand grows for a higher level of existing services, such as maintenance and public safety. Cities are also often faced with the costly prospect of offering added services, including making counseling services available to residents facing foreclosure.
Earlier this month, the League released preliminary findings from the fiscal conditions survey portion of the State of the Cities Report.