Budget conditions for America’s cities continue to be bleak, as reported in a new survey from the National League of Cities. Sales tax revenues remain well below the pre-recession trend, financial assistance from state governments has been slashed, and property tax revenues that normally exhibit little sensitivity to the business cycle have been hammered by the current housing-driven downturn. Mayors hoping for the federal government to step into the breach can find a lot to like in President Obama’s proposed American Jobs Act, which would offer billions to help sustain public sector employment and activity. But the plan contains one unfortunate oversight—ongoing transportation costs where the labor market impact of cutbacks could be particularly severe.
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