Layoffs, Furloughs and Union Concessions: The Prolonged and Painful Process of Balancing City Budgets

In a typical year, a big-city government spends two or three months wrangling over its annual budget. The mayor makes a proposal, the city council offers some amendments, and it's done. Not so in this year of the Great Recession. With state and local governments facing ongoing revenue declines, the budget process in many cities now seems virtually endless, with constant adjustments needed as the bad news keeps coming.

And the choices don't get any easier. With unemployment rates high, the public's appetite for tax increases is low, as is the willingness of city employees to accept reductions in compensation or jobs.

Some economists say that the end of the recession may be in sight. But there is no end in sight for the hard times that the people who run city governments are experiencing as they try to balance their budgets—or keep them balanced.

In a research brief published last May, the Philadelphia Research Initiative looked at how 13 major cities including Philadelphia were coping with their municipal budgets in the recession. The goal was to examine Philadelphia's approach to the fiscal crisis in the context of its peer cities around the country. At the time, Philadelphia and most of the other cities were in the process of coming up with budgets for their fiscal year 2010, which began July 1; a few others, including Chicago and Seattle, were talking about making major, mid-course adjustments in budgets that cover calendar year 2009. As a result, our initial report focused on proposals under consideration rather than final outcomes.

This follow-up report examines the choices those cities have made and tried to make during what has been a difficult time for the governments of many large American cities.

A link to the full report is below. Also read the related press release Pew Report Examines Budget Decisions in Philadelphia and Other Major Cities.