11.02 - 2010 Unallotments - Laserfiche WebLink

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ot 'AGUE OF '--�INNESOTA CITIES State of the Cities 2010 Key Findings CONNECTING & INNOVATING SINCE 1913 Cities across the state are facing increasingly challenging financial circumstances. • More than four out of five Minnesota cities (79 percent) reported being less able to meet their financial needs in 2009 than in 2008. In 2006, cities were roughly split between those better able to meet needs and those less able. Since then, the share of cities optimistic about their fiscal condition has steadily declined. • Roughly 80 percent of cities predict that their fiscal situation will worsen in 2010. Among those cities that experienced reductions to LGA and/or MVHC reimbursement in 2008 and 2009 only about 10 percent were positive about their financial situation in 2009. Similarly, roughly 10 percent of them are optimistic about being able to meet their financial needs in 2010. The context in which current state aid cuts occur is much more challenging than it was in 2003. • Sixty -one percent of cities experienced shortfalls in state revenues. This is down from 82 percent in 2003, but the overall city fiscal environment has grown more difficult. This is evidenced by a marked increase in the incidence of other revenue shortfalls. The shares of cities reporting shortfalls in property tax and fee revenues are much larger. • More than 60 percent of cities across Minnesota reported that property tax revenues fell short of budgeted amounts for 2009. That is more than double the share of cities with property tax shortfalls in �.. 2003. Frequent reductions to MVHC reimbursements and effects of the economic recession on property owners contribute to this trend. • Reports of fee revenue shortfalls grew from 17 percent in 2003 to 57 percent in 2009. Home and business owners are finding it much more difficult to pay their utility and other charges. Seventy percent of cities experienced an increase in unpaid utility bills in 2009. City residents dealing with unemployment or other financial struggles are less likely to pursue optional fee -based activities, like using municipal pools or ice rinks. Cities used a wide range of budget - balancing actions in 2009, including workforce cuts. • The most common strategies fell into three categories: revenue increases (fees and taxes), spending cuts (operating, growth of spending, public safety, and infrastructure spending) and relying on reserves. Seventy percent of cities enacted revenue increases, 46 percent made spending cuts, and 44 percent used their reserves. • In many cities, employee - related costs make up the largest portion of the budget. In 2009, two- thirds of cities cut or kept wages flat. A quarter of cities made reductions to the size of the workforce. • The average number of strategies used per city was three. More than a third of cities indicated that they implemented four to seven different budget - balancing actions. Cities see challenges continuing for several years. • The majority of cities expect to recover from the economic recession in two to five years. Four percent don't believe they will ever recover. There is greater variability in expected recovery times among Greater Minnesota cities and small cities. 145 UNIVERSITY AVE. WEST PHONE: (651) 281 -1200 FAX: (651) 281 -1299 ST. PAUL, MN 55103 -2044 TOLL FREE: (800) 925 -1122 WEB: WWWLMC.ORG