Not Out of the Woods: The Recession's Continuing Impact on Big City Taxes, Services and Pensions

May 26, 2010

For residents of many major U.S. cities, the recession will mean higher local taxes and new fees in the year ahead, continuing a trend that began this past year. And for some local government workers who retain their jobs, it will mean fewer and costlier employee benefits. Those are some of the conclusions that emerge from our ongoing review of how 13 city governments, including Philadelphia’s, have been coping with hard economic times.

Most of the cities have been dealing with another year of significant budget gaps, although their shortfalls, for the most part, were slightly smaller than a year ago. To offset drops in existing revenues, four of the cities are weighing or have approved higher local taxes or fees for fiscal 2011 that would impact a broad swath of residents or businesses. Six of them already had imposed increases for fiscal 2010. Among the 13 cities, as of late May, Philadelphia was the only one enacting a broad tax hike a second year in a row—a property-tax increase for fiscal 2011 after a sales-tax increase for fiscal 2010. But one way or another, all of the cities are looking for additional revenue streams from residents or businesses. Most cities are planning increases in smaller, targeted fees, fines or taxes—such as telecommunications fees, parking fines and an aviation fuel sales tax. Casino gambling that boosts local tax revenue has been proposed or recently approved for four of the cities.

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