Budgeting for Basics: The Changing Landscape of City Finances

Charged with providing myriad basic services, local governments are challenged by budget hurdles both cyclical and structural. Beyond the booms and busts of the economy, city finances are also often straitjacketed by wage and benefits agreements and taxpayer or legislative limits on the property tax, the largest source of municipal revenue.

Additionally, city financial structures vary widely across the nation. Some cities have responsibility for education, some can levy income taxes, and some charge a sales tax.

This study examines the finances of 162 cities from 1977—the year before California’s momentous Proposition 13 tax cut sparked a national property tax revolt—to 2000. Further, survey data from 54 cities collected in 2004 gauges cities’ responses to the recession of 2001.