June 29, 2009

An effort to provide mayors attending the 77th Annual Conference of Mayors in Providence with an up-to-date picture of the recession-driven budget problems that their fellow mayors are confronting has resulted in a compendium of reports on city actions to bring budgets into balance. These reports are now available to all mayors on The U.S. Conference of Mayors Web site — www.usmayors.org.

The compendium, released June 12 in the Providence Conference's opening press conference by Miami Mayor Manny Diaz, contains descriptions of current budget situations in 94 cities of all sizes across the nation. In an "urgent" June 9 memorandum from Conference CEO and Executive Director Tom Cochran, mayors were asked for information on the budget shortfalls their cities are being forced to address as a result of the recession, and the cost-cutting steps they are taking in response. Cochran says the mayors' responses — most received within 24 hours of his request — make it clear that, "The magnitude of the budget problem confronting cities as a group is enormous, far in excess of $100 million for many of our larger cities, and representing very large percentages of total budgets for cities of all sizes."

In a cover memorandum summarizing the contents of the compendium, Cochran explains that, as a group, "The budget descriptions submitted to the Conference illustrate the uniqueness of each city's fiscal situation. But they also show that the recession-driven conditions creating both current and projected budget shortfalls are shared by most cities." Examples of problems cited by many of the cities in the report include:

• Cuts in state aid to municipalities, both actual and anticipated;

• Lower property values and real estate assessments that translate into less property tax revenue;

• Significant increases in pension and health benefit costs;

• Less sales tax and income tax revenue;

• Less real estate transaction tax revenue;

• Fewer building permits and commercial developments generating fees; and

• Less income from investments because of lower interest rates.

The actions being taken to close budget shortfalls — actions affecting personnel and services and the generation of additional revenue — also are unique to each city's circumstances, but also fall into several broad categories, says Cochran. Examples include:

• Hiring freezes, hiring deferrals, elimination of positions, employee layoffs and furloughs, early retirement programs, elimination of overtime;

• Wage and benefit cuts, elimination of benefits for new hires and other employee categories;

• Increased employee contributions (and lower city contributions) to personnel benefits;

• No cost of living increases;

• Deferral or cancellation of capital projects, vehicle replacements;

• Cuts in virtually every service required — code enforcement, landscaping and maintenance, street repairs, waste management, libraries, neighborhood centers, among them;

• Cuts in administrative and support costs — supplies, travel, training, among them; and

• Increases in fees, service charges, fines, penalties.

"The current, unprecedented economic crisis is the central issue for urban and suburban America today," Cochran said. "Thanks to mayors and many other officials in 94 cities, we have a document that all city leaders can go to for practical examples of what can be done, or must be done, to bring city budgets into balance."