Significant Budget Shortfalls Could Mean More Job Losses

National League of Cities Calls for Local Jobs For America Act

WASHINGTON, May 24 /PRNewswire-USNewswire/ -- Continuing research into the economic and fiscal conditions of cities demonstrates the need for Congress to Adopt the Local Jobs for America Act.  A new report from the National League of Cities indicates that most cities and towns are facing worsening economic conditions that are forcing layoffs and reductions in city services.

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The State of American Cities Survey on Jobs and the Economy, shows that 7 in 10 city officials indicate they are responding to the economic crisis by making personnel cuts, including layoffs, hiring freezes and furloughs.  Many cities are also cutting public safety spending and healthcare benefits.

The report identifies declining property markets as a growing challenge for cities.  Over 80% of officials cite the commercial market as a foremost concern. As a major contributor of local revenue, the resulting loss of property taxes could act as a significant barrier to local economies' ability to recover.  

As a response to the declining economic conditions, cities continue to engage in the difficult task of balancing their budgets.  In addition to those cutting personnel, 68% are cutting capital projects.  22% of city officials indicate they are cutting public safety budgets, which is typically an option of last resort.

City officials indicate that service and employment cuts are coming at a time when cities are seeing record increases in poverty.  63% of officials say that poverty has increased in their community in the last year, the largest percentage since the question was asked in 1992. Cities with increased amounts of poverty typically see greater service requests, the same services now being cut.

With local and state sectors comprising about one-eighth of GDP, and cities making up a significant portion of this sector, the services and employment offered by local governments are critical to the health of local and regional economies that drive national economic performance.  

Looking forward, over half of all respondents say they anticipate that next year will see even greater cuts in city services if taxes or fees are not raised. Local officials agree that the state of America's cities continues to worsen, threatening long-term national economic recovery.

City budget shortfalls are predicted to become more severe as tax collections, which lag the overall economy, catch up with economic conditions.  Without the Local Jobs for America Act, city leaders will have to lay off more employees, cut essential services and cancel projects — retrenchments that could place a drag on our national recovery.

These cuts demonstrate a clear need for a federally-funded local jobs bill that gets city employees back to work and creates meaningful employment opportunities in local communities. The Local Jobs for America Act will assist cities to protect public safety and avoid laying off municipal employees.  It will also lay a foundation for future growth as cities will be given funds to innovate and create useful jobs in both municipal and nonprofit agencies.

The State of American Cities is an annual survey of municipal officials.  You may find the report here.

The National League of Cities is the nation's oldest and largest organization devoted to strengthening and promoting cities as centers of opportunity, leadership and governance. NLC is a resource and advocate for 19,000 cities, towns and villages, representing more than 218 million Americans. 

SOURCE National League of Cities