Fiscal Challenges Facing Cities: Implications for Economic Recovery

The current economic crisis is not only a national crisis; it is also a metropolitan crisis. And soon the downturn will bring a local government fiscal crisis. Given the normal lag time of 18–24 months between changes in the economic cycle and its impact on city fiscal conditions, local officials anticipate that the next year or two will bring large-scale city government layoffs, deep cuts to local government services, and halted or delayed capital projects. Just as federal stimulus package spending trails off, city fiscal dynamics could well place a serious drag on economic recovery.

On November 19, the Brookings Metropolitan Policy Program and the National League of Cities co-hosted a forum on city fiscal conditions, the responses being undertaken by creative mayors, and the implications for national economic recovery. Brookings Vice President Bruce Katz and National League of Cities Executive Director Donald Borut opened the event. Following reviews of current and projected trends in local government fiscal conditions, Wall Street Journal economics editor David Wessel moderated a panel of sitting mayors, including Michael Nutter of Philadelphia; Chuck Reed of San José, California; Scott Smith of Mesa, Arizona; and Elaine Walker of Bowling Green, Kentucky. Jared Bernstein, chief economist and economic policy advisor to Vice President Joseph Biden, closed the session.

Panelists and speakers took audience questions.