Survey results reveal financial stability overall, but suggest that challenges remain for cities.
The 2018 State of the Cities Report presents findings from the League’s 15th annual Fiscal Conditions Survey. The survey was sent to the chief administrative official in each member city, and the results overall suggest that things continue to be fairly stable for cities right now.
While the data does suggest that challenges for cities remain, especially in the areas of infrastructure funding and employee costs, most city officials who responded said that their city was better able to meet needs in 2017 than in the previous year. This echoes the nationwide trend. The National League of Cities reported that 69 percent of city finance officers were optimistic about meeting their city’s fiscal needs in 2017.
Two-thirds of Minnesota cities overall (66 percent) said they were better able to meet needs in 2017 and a slightly bigger share (70 percent) predict favorable circumstances in 2018. The last several years have represented a stable period for local government aid (LGA) and the property tax system in terms of major policy changes or funding adjustments.
Two issues causing stress for cities are health insurance and infrastructure needs. A respondent commented, “Health insurance cost increases are a huge problem and need to get under control.” Another city official offered this comment: “Infrastructure needs are increasing rapidly, with very little available assistance to address them.”
Among all revenue sources, shortfalls in property tax revenues and in fees/charges/license revenues were cited the most often by cities. About a third of cities overall said that revenues from those two sources were either slightly less than expected or more than 10 percent less than expected (32 percent and 35 percent, respectively). The NLC fiscal conditions report highlighted a slowing of general fund revenues among their member cities.
If you have questions about the 2018 State of the Cities Report, contact Rachel Walker at (651) 281-1236 or firstname.lastname@example.org.