City Priorities in Hard Times

Introduction

In this post, we share our latest research on city budget trends. The Great Recession (2008/2009) was the most traumatic downturn for cities in a generation. City’s budget responses to the recession help us understand city priorities. What happened to high-profile city services? We focus on police, fire, park and recreation, and libraries across the U.S. and in Texas.

Data Source

We used data from the U.S. Census Bureau Census of Governments for 2007 and 2012. These are the most comprehensive and accurate measures of local government spending. These Census years let us measure the change one year before the downturn to three years after the bottom. Because of the lag in property tax decreases, most cities saw their worst economy three years after the recession. This should mean that 2007 and 2012 represent the best and worst budget years since the 1980s for most cities.

We are reporting percentage changes in spending that have been adjusted for population growth and inflation. First, we calculated per-capital spending for each year, then changed the 2007 values into 2012 dollars using the state and local price deflator from the U.S. Bureau of Economic Analysis.

Core City Services

In this first look, we wanted to know what happened to the most high-profile city services. We included the two largest operating expenses for most cities: police protection and fire protection. We also looked at two other visible services: park and recreation (parks) and libraries.

Findings

Overall, cities nationally cut these four services more than did cities in Texas. Cities in the U.S. and in Texas saw much larger decreases in parks and library spending than in the two public safety areas. In the U.S., spending changed as follows: police (-0.1%), fire (-1.3%), parks (-8.5%) and libraries (-10.2%). The respective changes for Texas were: police (+4.0%), fire (+4.1%), parks (-9.3%) and libraries (-4.0%). So Texas public safety actually experienced higher funding levels after the recession. Remember that this calculation is adjusted for inflation and Texas’ faster growing population. While still cutting, Texas cut libraries less than U.S. cities overall. The U.S. and Texas had similar reductions in parks spending.

Summary observations:

Based on highly visible public services, the recession was a bigger hit to spending nationally that in Texas.

The largest city service in budget terms, police spending, was essentially held flat nationally, but grew in Texas. The recession was certainly a blow to police budgets, but in total, cities’ response was to slow the rate of growth in police spending and cut other services more.

This analysis does not tell us how tax and fee changes impacted cities’ budget strategy. We know that there were many fee increases nationally and some cities raised taxes. Cuts would have been deeper without those revenue strategies, but we will have to consider them another time.

What’s Next

Next week, we will continue our series profiling the economics of major city services when we turn to the service that faired worst in today’s post: park and recreation. In the meantime, let us know how we can help you make more confident economic and fiscal choices for your community. Contact Us.

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