The party's over, but for both Cleveland and Philadelphia, site of the Republican National Committee and Democratic National Committee conventions respectively, the day-to-day struggle to maintain municipal fiscal health remains.
An analysis of the Lincoln Institute’s Fiscally Standardized Cities database reveals that both cities are struggling with structural issues that in fiscal terms keep them on the brink. The database allows comparison of local government finances for 150 of the largest U.S. cities across more than 120 categories of revenues, expenditures, debts and assets.
The findings along with newly compiled charts showing trends in expenditures, revenues, and the impact of housing markets, appeared in an op-ed essay by Lincoln Institute research fellow Andy Reschovsky, published by Next City this week.
Like many other post-industrial cities, Cleveland and Philadelphia are grappling with population loss, declining employment, particularly in manufacturing, highly fragmented metropolitan areas, the lingering effects of the Great Recession, and the boom and bust of the housing market, Reschovsky writes. Cleveland and Philadelphia are experiencing the same turbulence as many other cities in the database:
- After adjusting for population change and inflation, total local government spending in the average central city is lower in FY 2013 than it was in FY 2007, just before the start of the Great Recession.
- Most types of spending have been reduced, with spending on public education being particularly hard hit.
- The economic recession, exacerbated by the housing crisis (falling housing prices and rising foreclosure rates) has resulted in reductions in city property tax revenues.
- The average central city has experienced large cuts in state aid. These cuts in aid can be attributed to the hit to state tax revenues from the Great Recession, exacerbated by the decision in some states to cut state income, sales, and business tax rates.
- Federal budget policy has resulted in a steady reduction in federal aid to cities. Although cities were helped by the Federal Stimulus (ARRA), federal aid peaked in 2011, and has declined continuously since then.
There is a positive impact of hosting the major party conventions, to be sure. The US Travel Association reported that Philadelphia will reap $180 million in direct spending as a result of the DNC event. Cleveland, as well, has been investing heavily in its downtown, which was showcased during the RNC. But while the two cities were in the spotlight, we hope a serious conversation about fiscal challenges in cities throughout the campaign.
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