More local municipal cuts coming from states: What does Greensboro do? Raise taxes and borrow to spend more on what the community doesn't need.

Shortfalls for US cities could reach $56 bln

 

U.S. cities will face a collective budget shortfall of at least $56 billion over the next two years, with the current recession not seen hitting bottom until 2011…

 

The National League of Cities said that because economic recoveries in cities lag national ones by about two years, the pain from the recession that began in 2007 could continue for years to come.

 

The collective shortfall could reach $83 billion through 2012, the league said. Cities will seek to cure revenue declines and spending pressures with higher service fees, layoffs, unpaid furloughs, and drawing on reserves or canceling infrastructure projects, the report said.

 

States are also threatening to cut another lifeline for cities -- direct aid transfers. As they attempt to reconcile their own battered budgets, states are saying they can send less money to cities.

 

…States cut aid to cities by 9 percent in 2003 and 2004 in response to the 2001 recession, according to the report.

 

…If states simply cut 10 percent of aid per year from 2010 to 2012, cities will lose $21 billion in total, the league estimated.

 

Lisa Lambert

Reuters, January 13, 2010