While congressional leaders in Washington bicker over the government shutdown and the mechanics of raising the debt ceiling for just a few weeks, the majority of city governments around the country are sitting pretty — or, at least, in much better financial situations than they have been over the past five years.
It’s a nice change from the lean years following the Great Recession, when many cities’ finances were battered by faltering local housing markets, reduced tax bases, aging infrastructure, and growing healthcare and pension obligations. Today, 72 percent of city finance officers say that their cities will be better off money-wise in 2013 than in 2012, according to new research from the National League of Cities, an advocacy group that represents more than 1,700 cities across the country.
What’s the cause for optimism? Well, it’s primarily based on increased revenue in the form of city income and sales taxes. In 2012 alone, city sales taxes rose by 6.2 percent, the research shows, a level not seen since the start of the recession. City income taxes increased by 4.4 percent in 2012 and are projected to grow another 2.3 percent in 2013.
On top of that, city officials began to make tough choices in an effort to balance their budgets, according to the League of Cities’ data. Thirty-nine percent of city financial officers raised user fees to pay for city services; roughly one-quarter of cities reduced their share of healthcare benefits or pension obligations for public employees. These are financial choices that the federal government is still struggling with as it wages yet another battle over the fate of long-term spending on Medicare and Social Security, as well as the across-the-board spending cuts known as sequestration.
All of this can make city officials from around the country look disparagingly on the federal government’s ongoing gridlock. Just ask Ronald Green, the controller of Houston, a city that has gotten its fiscal house in order thanks to a diverse local economy that includes a lucrative port, local universities, and major healthcare facilities. “We don’t have the luxury of shutting down,” Green says. “Even with all of that going on, we’re still going to pick up your trash. You have 911 — someone is still going to respond. If you turn on that water, it’s still going to come on.”
Houston has not yet had to make any major changes due to the ongoing government shutdown, Green says — though in the coming weeks it may have to evaluate some grant-funded positions if the shutdown continues.
This isn’t to say that cities are in the clear in the long-run. They still face major hurdles from big-ticket budget items like pension and healthcare costs for municipal workers (see: Detroit, Mich.), not to mention infrastructure that hasn’t been updated in years. But if anyone is pointing fingers about who is being proactive in tackling financial quandaries and who’s dithering, then the city officials win over the federal elected officials. After all, at least cities manage to pass their budgets year-after-year.
What We're Following See More »
As the Russia investigation heats up, "the role of Marc E. Kasowitz, the president’s longtime New York lawyer, will be significantly reduced. Mr. Trump liked Mr. Kasowitz’s blunt, aggressive style, but he was not a natural fit in the delicate, politically charged criminal investigation. The veteran Washington defense lawyer John Dowd will take the lead in representing Mr. Trump for the Russia inquiry."
President Trump's attorneys are "actively compiling a list of Mueller’s alleged potential conflicts of interest, which they say could serve as a way to stymie his work." They plan to argued that Mueller is going outside the scope of his investigation, in inquiring into Trump's finances. They're also playing small ball, highlighting "donations to Democrats by some of" Mueller's team, and "an allegation that Mueller and Trump National Golf Club in Northern Virginia had a dispute over membership fees when Mueller resigned as a member in 2011." Trump is said to be incensed that Mueller may see his tax returns, and has been asking about his power to pardon his family members.
In addition to ties between Russia and the Trump campaign, Robert Mueller's team is also "examining a broad range of transactions involving Trump’s businesses as well as those of his associates, according to a person familiar with the probe. FBI investigators and others are looking at Russian purchases of apartments in Trump buildings, Trump’s involvement in a controversial SoHo development in New York with Russian associates, the 2013 Miss Universe pageant in Moscow, and Trump’s sale of a Florida mansion to a Russian oligarch in 2008, the person said. The investigation also has absorbed a money-laundering probe begun by federal prosecutors in New York into Trump’s former campaign chairman Paul Manafort."
Special Counsel Robert Mueller's team is "is examining a broad range of transactions involving Trump’s businesses as well as those of his associates", including "Russian purchases of apartments in Trump buildings, Trump’s involvement in a controversial SoHo development with Russian associates, the 2013 Miss Universe pageant in Moscow and Trump’s sale of a Florida mansion to a Russian oligarch in 2008."
"A Senate bill to gut Obamacare would increase the number of uninsured people by 32 million and double premiums on Obamacare's exchanges by 2026, according to an analysis from the nonpartisan Congressional Budget Office. The analysis is of a bill that passed Congress in 2015 that would repeal Obamacare's taxes and some of the mandates. Republicans intend to leave Obamacare in place for two years while a replacement is crafted and implemented."