“The fiscal gloom hanging over U.S. cities and local governments will lift slightly in 2013 as the pace of spending cuts slows, according to an economic assessment presented on Thursday to a mayors’ conference in the U.S. capital.
Real state and local government spending will decline by 0.5 percent this year, compared to a 1.3 percent drop in 2012, said James Diffley, director of regional economics for IHS Global Insight.
“In the state and local government sector the pace of budget tightening has eased slightly and revenues have begun to improve, but as you all know all too well, municipalities remain under severe pressure,” he said.
In December, local governments shed 14,000 jobs, compared to state governments that gained 4,000 jobs, according to the Labor Department, showing that cities and counties continue to struggle with spending.
“Many of the problems we have stem from an economy that still has not kicked in and got back to where we were,” said Scott Smith, the mayor of Mesa, Arizona, at the meeting of the U.S. Conference of Mayors.
“We still have too many of our citizens who are out of work – who are unemployed or underemployed.”
Cities rely primarily on property taxes for revenues, and when the housing bubble burst, their income slowly collapsed. Property tax assessments have not picked up yet, while states and the federal government have pared the aid they send to local governments, forcing many cities to continue to slash spending….”
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