National League of Cities Report: Many Cities Hiking Regressive Taxes and Fees

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Most local lawmakers are painfully aware that when state governments fail to solve their fiscal problems through revenue-raising tax reform, these problems tend to roll downhill to the local level. A new report from the National League of Cities confirms this. The report finds that many cities are looking to regressive revenue sources to make ends meet in 2009. The report, based on a survey of elected city officials around the nation, finds that 45 percent of cities plan to hike fees, 27 percent are creating new fees, and 25 percent plan to increase local property taxes in 2009.
The report also asks local leaders what external factors are prompting these painful decisions. Not surprisingly, the leading culprit is the "health of [the] local economy" (identified by 77 percent of cities as a factor), but the second-highest ranking cause is cuts in state aid to local governments (50 percent). This isn't news to anyone in California, where the budget agreed upon last month relies on "borrowing" $2 billion in local tax revenue from local governments. But the NLC report should prompt observers in other states to ask whether their budget has been balanced on the backs of local governments.

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