Considering a two-year roller-coaster ride of an economy, the fiscal health of major cities is eliciting feelings of cautious optimism by experts living in them.
The sunbelt city of Atlanta remains a destination of inbound migration that has pushed the city population to about 500,00 with anther six million living in the metro region. Even with all the growth, funding municipal services at this point is not a concern.
“I haven’t been able to uncover any evidence of local governments in the metropolitan area that are experiencing a huge downturn in revenue,” said Shirley Clarke Franklin, the former mayor of Atlanta. Franklin served as mayor from 2002-2010 and refers to herself as the “sewer mayor” for her dedication to attempting to push water-based infrastructure projects over the goal line during her time in office.
The comments came during Thursday’s Volcker Alliance and Penn Institute for Urban Research webinar. The event was moderated by William Glasgall, Volcker Alliance senior director, public finance, and Susan Wachter, co-director of Penn IUR.
The program was kicked off with references to a recently-issued report by the National League of Cities. The report highlights many cities hewing to conservative financial approaches that paid dividends. The economy’s effect on tax revenues was also explored.
“Governments that rely heavily on only property taxes for their general-purpose expenditures saw less turbulence in budgeting after the shutdown, because property taxes are inelastic. Government that relies on all three types of taxes saw huge ups and downs in their budgeting numbers,” said Farhad Omeyr, program director, National League of Cities
The city of New York appears to be in decent shape especially in the case of flush pension funding. “The city has fully accounted for the increased pension contribution that are required by the market correction,” said Greg David, director, Business and Economics Reporting Program, Craig Newmark Graduate School of Journalism. “Unless the market goes down much further than it has, we don’t have any big pension overhang that a lot of other cities and states haven’t taken the steps to recognize. The bottom line is the city is fine for this year and probably next year.”
Chicago also checked in with a good public finance report card. “The big news out of Chicago right now is that it’s no longer junk according to Moody’s, their investor service upgraded the city of Chicago back to investment grade where it last was in 2015,” said Heather Gillers, a Chicago-based reporter with The Wall Street Journal.
Amidst all the good cheer there are a few causes for concern. Atlanta is dealing with a long-term shortage of public transit.
“Demand is greater than it’s ever been,” said Franklin. “Everybody sits in traffic. You plan your time around traffic because the transit system doesn’t go where the people need to go. Money is only part of our problem.”
The ever-looming threat of recession could land a heavy blow in New York.
“The issue is what will happen on Wall Street,” said David. “A Wall Street downturn will affect the city because it accounts for 9% of all city tax revenues but 22% of all state tax revenues. We have a couple of years breathing space and then the problems could be severe.”