Cities, Change and Sustainability


Earlier in February, I had the opportunity to speak to visiting students and faculty from Korea at UT-Dallas. Most of these visitors are focusing on architecture, engineering and public policy so they are usually interested to learn about U.S. cities, governance and economic development. The following are some of the slides I shared. These focus on our early research into why so many cities find themselves in tough times financially. You can find the full briefing, which also covers some basics of Texas municipal government here.

Fiscally Healthy City

We define a fiscally healthy city as one that, over the long-run, its tax base and revenue system supports its services and infrastructure without causing competitive disadvantages.


The Fiscal Cycle

City Fiscal Cycle

Stylized History of U.S. Municipal Finances

The roots of municipal fiscal insecurity are largely from a lack of transparency and citizen engagement. That means… Lax fiscal practices and poor choices until… Major economic crisis reveals the level of ongoing fiscal stress. It is a regular pattern.

There was no golden urban age. U.S. cities have been trying to catch up to their constituents’ demands for more and better services for 200 years:

  • Population growth
  • Technology change (business practices and energy sources)
  • Awareness and costs of health and environmental risks
  • Political and cultural changes
  • Economic competition from federalism

Land use remains an ongoing challenge for cities. Cities shifted from a largely urban form to a majority suburban form. This has several consequences for sustainability:

  • More unproductive space per parcel (setbacks, parking)
  • Requires more public infrastructure per private building
  • Requires more city fleet and staff per household / business
  • More privacy, more space

Sprawl has higher internal and external costs, but mostly internal benefits. It is a higher-cost way of occupying the land. Over time, some cities can afford it, some not.

Neighborhood Decline and the Favored Quarter

Neighborhood Decline

You can find decaying neighborhoods of all types across America.

Any neighborhood, urban or suburban can decline. A city’s prospects depend on how much of its favored quarter remains inside its corporate limits. The fortunes of suburbs largely depends on which side of town they lay.

Favored Quarters

Favored quarters everywhere. Pinks = household inc. > $100K, blues < $25K.


DFW Fav Quarters

Dallas and Fort Worth each have a favored quarter, north and southwest, respectively.


Rise of Modern Cities

19th Cent City Spending

19th Century City Spending.

U.S. cities modernized in the middle of the 19th century. They added professional police and fire departments, adopted libraries and cultural facilities, built parks and all the modern infrastructure we associate with a city: paved streets, water mains and other utilities. Since that time, city spending has grown faster than city population. Larger cities have been spending more for over a century.


Safety Costs

Growing public safety costs, adjusted for inflation and population growth.

In the 20th Century, those services that were adopted in years past cost more and more. This is partly because we are a more metropolitan nation. There are more large cities with residents that have similar, high expectations about the appropriate level of municipal services. It is also because cities produce their services with a lot of labor. Local governments have done little to replace staf with automation, but there have been significant increases in the capital equipment that have helped these staff improve the effectiveness of operations. Still, worker costs keep increasing. Cities will need to look for different ways of delivering services if they hope to stay solvent in coming years.


Municipal Fire Departments


Fire protection is the second largest general fund spending category for U.S. and Texas cities and towns. According to the Texas Municipal League, one-in-five city general fund dollars go to municipal fire and emergency life support services. It is one of the most visible services provided by local governments. Fire departments roles have changed over the years and the associated costs have increased, meaning every community has or will be wrestling with how to maintain the level of services their communities expect.

Fire Services Statistics

Firefighting has been considered a core municipal service since about the time of the U.S. Civil War. That conflict decimated many volunteer brigades. The growing, urbanizing U.S. population also began demanding better organized fire protection. Most large cities and towns began a long process of bringing their volunteer companies under city control. Today, volunteer firefighters outnumber career fire fighters by more than two-to-one. Volunteer companies mostly serve smaller towns and rural areas. Most Americans are protected by all-career fire departments.

According to the most recent survey by the National Fire Protection Association, there are almost 30,000 fire departments in the U.S. About half of these protect communities with fewer than 2,500 residents. Eight percent of these departments are all-career staffed and they cover most of the U.S. population. Most departments, about 61 percent, also provide either basic or advanced life support services (EMS). For several decades, the number of firefighters per 1,000 population nationally has been relatively constant at about 8.7. There are almost 1.7 career firefighters per 1,000 U.S. residents.

Fire Capital and Salaries

Fire protection is a capital-intensive line of business. There are 58,000 fire stations in the U.S. Local fire departments operate almost 160,000 vehicles including 70,000 pumper trucks and 7,000 aerial (ladder) trucks. At current rates, total replacement of just these signature fire trucks would cost over $50 billion nationally. Each fire fighter’s turn-out gear including breathing apparatus is over seven thousand dollars. Equipment maintenance and replacement is not only a key safety issue for local communities, it is an area that deserves attention from budget efficiency standpoint.

Turning again to Texas Municipal League data, median firefighter salary in Texas is about $30,000. Just as important are health expenses and retirement. Like police officers, firefighters often require specialized mental and physical health support due to the nature of their work. Ongoing training is also essential.

Spending Challenges and Changing Roles

Nationally, total government spending on local fire departments was $43 billion in 2013. This is up 170 percent since 1983. When adjusted for inflation, fire protection spending has more than doubled since 1983.

Several factors seem to be driving fire department budget increases above and beyond population and inflation growth. These include the need to increase staffing to deal with shorter work weeks. Application of Family Medical Leave Act coverage to city fire departments meant more positions to accommodate new leave requirements.

A second driver is the growing role of EMS / ambulance calls. Most dispatches of fire department personnel are for medical calls. In 1980 there were 10.8 million emergency calls – 3 million were fires. The most recent year’s data for 2013 revealed total calls almost tripled to 31.6 million. The number of fire calls fell by 60 percent to 1.2 million. Like all municipal services, fire departments also represent a growing health care and retirement expense burden.

Though fire departments are one of the most visible, well-liked and heroic of city services, they represent a growing strain on municipal finances. Just like our 19th Century predecessors, current citizens demand rapid, effective fire services. To meet this demand, local leaders will need to pay more attention to all facets of department operations. This includes reexamining response protocols, staffing, and fire station placement. There are also opportunities to lower long-term costs through better urban design. Fire services costs are one of the most sensitive to the built environment. Sprawling development requires more staff and assets than tighter development patterns. Better building codes and inspection processes are also a way to lower fire damages and operating costs.

Next Week

Next we will review some of our latest findings on municipal public finance and economic development practices. In the meantime, sign up for email updates and let us know how we can help. Check out some of the other information on our site.

City Priorities in Hard Times


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.


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.