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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