A new study from The Pew Charitable Trusts' Philadelphia Research Initiative looks at how 13 major cities are coping with the recession and finds that most are facing significant budget gaps and are cutting services and personnel in response.
The report, Tough Decisions and Limited Options: How Philadelphia and Other Cities are Balancing Budgets in a Time of Recession, examines the budget decisions that have been proposed or enacted in Atlanta, Baltimore, Boston, Chicago, Columbus (OH), Detroit, Kansas City (MO), Los Angeles, New York, Philadelphia, Phoenix, Pittsburgh and Seattle.
Four of the cities studied are planning major tax hikes, with New York looking at two tax increases, in property and sales. Philadelphia is planning a five-year, one percentage point increase in the sales tax; Atlanta has a property tax increase on the table; and Columbus is considering a higher income tax.
In some cities, including Boston and Los Angeles, major tax hikes are all but impossible to enact—the result of state laws, ballot initiatives and constitutional restrictions.
“We found that almost every city we studied has a significant budget problem on its hands, largely due to falling tax revenues, decreased state aid and weakened pension funds,” says Larry Eichel, project director of Pew's Philadelphia Research Initiative. “But the size of the problem varies dramatically from place to place, as do the strategies for dealing with it.”
Taking into account the wide variation in the size of city budgets, the study compares the one-year budget gaps in the cities in percentage terms, with Seattle and Baltimore appearing to be in the best fiscal situation. Alone among the cities studied, Pittsburgh has a modest surplus (1 percent) for the current budget year. Among the others, Philadelphia, with a one-year budget gap of about 11 percent, is roughly in the middle, with some cities, including Detroit, facing gaps of about 20 percent.
The study examines the causes of city-budget gaps and the various ways communities are reducing expenditures and generating revenue. Among the findings:
View the full report: Tough Decisions and Limited Options: How Philadelphia and Other Cities are Balancing Budgets in a Time of Recession (PDF).
About the Report
The cities covered in this study were selected in order to provide a broad demographic and geographic mix. There also was an emphasis on cities that are on the same budget cycle as Philadelphia—with fiscal years beginning July 1. Since most of the cities studied are in the process of approving budgets for the coming fiscal year, the final budgets may look different than the mayoral proposals now under consideration.
To prepare this report, researchers at the Philadelphia Research Initiative spent two months studying city budget documents from the selected cities, reading mayoral speeches, interviewing budget officials, and talking to journalists and independent analysts. It was written by Claire Shubik, senior associate at the Initiative, with research associate Laura Horwitz and project manager Thomas Ginsberg.
About the Philadelphia Research Initiative
The Philadelphia Research Initiative (www.pewtrusts.org/philaresearch) was created by Pew in fall 2008 to study critical issues facing Philadelphia and provide impartial research and analysis for the benefit of decision makers, the news media and the public. The initiative conducts public opinion polling, produces in-depth reports, and publishes briefs that illuminate front-and-center issues.