For Growing Numbers of Struggling U.S. Cities, the Downturn Has Arrived

A boom in some big metropolitan areas has masked fiscal weakness in cities tied to shrinking industries

A downtown intersection in Harvey, Ill. MICHELLE KANAAR FOR THE WALL STREET JOURNALSHAREFACEBOOKTWITTERPERMALINKByHeather GillersMarch 3, 2020 10:16 am ET

HARVEY, Ill.—Christopher Clark was elected mayor last year, pledging to seek business tax reductions and lower water bills. They were popular goals that seemed in reach given that city revenues had been rising almost every year since the recession.

On taking office, Mr. Clark quickly figured out the city’s progress had stalled. Property tax collections were down, and businesses were cutting jobs. A fall in city revenue, coupled with growing debt payments, meant there would be no relief from business taxes or water bills.

“We just have to figure out ways to do more with less,” Mr. Clark said, echoing a familiar mantra surfacing in dozens of U.S. cities.

A decade of growth in the U.S. economy allowed cities to patch fiscal holes left by the financial crisis and recession. A surprising number now see new signs of trouble.

The proportion of American cities expecting general-fund revenue to drop more than 3% when the books close on the 2019 fiscal year increased to 27% from 17% in fiscal 2018, when adjusted for inflation. That is one of the findings from a Wall Street Journal analysis of data collected from 478 U.S. municipalities by the National League of Cities, an advocacy group.

Christopher Clark, the mayor of Harvey, Ill.

PHOTO: MICHELLE KANAAR FOR THE WALL STREET JOURNAL

The total general-fund revenue reported by these cities—locales that span the U.S.—is expected to be lower in fiscal 2019 than in fiscal 2018, adjusted for inflation, the first such dip in seven years. Cities in the survey range in population from the low tens of thousands to the millions…….more here

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