MUNICIPAL FINANCE CHALLENGES

AND POTENTIAL SOLUTIONS

Michael Pagano, dean emeritus, University of Illinois at Chicago College of Urban Planning and Public Affairs and former Brookings Metro non-resident fellow, said states should loosen their grip on regulating what cities can do, so local government can be flexible to meet unique shifts in policy.

Pagano noted that Ohio is one of the very few states that allow cities to impose an income tax, which means cities continue to get income-tax revenue, whether an employee is remote most or part of the time.

However, in a city reliant on property taxes, if a downtown building is half empty, its value goes down and thus the city’s essential revenue is reduced.

MUNICIPAL FINANCE CHALLENGES

AND POTENTIAL SOLUTIONS

Michael Pagano, dean emeritus, University of Illinois at Chicago College of Urban Planning and Public Affairs and former Brookings Metro non-resident fellow, has researched public finance for decades. 

He said federal funding typically accounts for only about five percent of a municipal operating budget, so federal cuts won’t hurt deeply.

The area that will see a drastic change is capital spending.

“With the surge of infrastructure and stimulus money, cities have been designing a city future that had federal support for electric charging stations, expansion of infrastructure and repairing old infrastructure,” Pagano said.

“This is especially true in older northern states that are not experiencing the demographic gains that southern states are.

The loss of federal dollars forces them to lower their expectations of what the future will be.”

MUNICIPAL FINANCE CHALLENGES

AND POTENTIAL SOLUTIONS

Fatima Yousofi, senior officer, Infrastructure and Pensions, The Pew Charitable Trusts, said transit funding is suffering nationwide.

Remote work has reduced ridership, but dozens of cities have workers who still depend on commuter rail.

When it comes to finding new funding mechanisms, Yousofi praised California for being the first state to allow the creation of special Climate Resilience Districts.

The districts can finance projects that help communities adapt to the impacts of wildfires, sea-level rise and flooding.

ADA ACCESS AND MOBILITY MUST BE MAINTAINED DURING CONSTRUCTION

IT’S THE LAW.  MIAMI BEACH IS VIOLATING IT

This bumpy, steep & horrible 20+ feet of tar pretends to be an ADA accessible sidewalk.

This is Lincoln Road at West Avenue in Miami Beach.

It must be fixed immediately. 

Lengthy construction means temporary sidewalks and ramps must be compliant.

It’s the law.

MUNICIPAL FINANCE CHALLENGES

AND POTENTIAL SOLUTIONS

Fatima Yousofi, senior officer, Infrastructure and Pensions, The Pew Charitable Trusts, said with drastic federal cuts, states will have to take a more active role in facilitating capital funding.

She said the continuity of major road, bridge, highway, water and other infrastructure projects hinges on states creating infrastructure banks, offering low-cost financing and bonding. 

She pointed to an example in Vermont where several rural communities created one large bond issuance. Teaming up created capacity and helped small communities share the administrative costs and bond reporting duties.

MUNICIPAL FINANCE CHALLENGES

AND POTENTIAL SOLUTIONS

Josh Goodman, senior officer, State Fiscal Health, The Pew Charitable Trusts, noted the paradox that virtually all local governments are trying to create more affordable and attainable housing, but they are limited in funding it themselves through property taxes, because higher property taxes contribute to the high cost of housing.

MUNICIPAL FINANCE CHALLENGES

AND POTENTIAL SOLUTIONS

Josh Goodman, senior officer, State Fiscal Health, The Pew Charitable Trusts,  suggests that states loosen their grip on regulating what cities can do, so local government can be flexible to meet unique shifts in policy.

“If a state mandates small class sizes in schools, it can add billions of dollars in expenses for a huge city such as New York,” he said.

“Boston is highly dependent on property taxes, but they might not keep pace with inflation.

The state hasn’t given the cities the ability to levy income or sales taxes, so the cities are limited in how they fill [the budget] gap.”