Worsening outlook for local governments.(News & Numbers)

The nation's cities saw improved finances in 2007 but now project slowing revenues and increased spending pressures for 2008 and beyond, according to the National League of Cities' annual research brief on America's cities.

Seven in 10 city finance officers report their cities are better able to meet fiscal needs in 2007 than in 2006--but revenues next year are expected to grow by a mere 0.4 percent in inflation-adjusted dollars while expenditures are projected to increase by 3.5 percent.

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While city tax bases are in relatively good shape, the research brief points to employee wages, infrastructure needs, public safety needs, health benefits, pensions, and inflation as creating budgetary pressure in the vast majority of cases. Additionally, more cities reported reduced federal aid than increased aid.

Cities in the Midwest were the most likely to report weak financial conditions, according to the report, with only just more than half the respondents in this region stating that 2007 finances were improved over the year before.

Data in the report, produced annually by Professor Michael Pagano of the University of Illinois at Chicago and NLC Policy and Research Director Christopher Hoene, are based on the NLC's annual City Fiscal Conditions Survey. Data for 2007 are drawn from 359 responding city finance officers--a response rate of 34 percent. For more information go to http://www.nlc. org/ASSETS/3C9952A7140B472592E58C C9B4A8EF13/07_FiscalSurveyBrief.pdf.

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