Fiscal forecast optimistic

More than three in five city officials say their cities were better able to meet financial needs in 2005 than in previous years, according to a survey by the National League of Cities. To reach these results, nearly half of the cities surveyed increased fees and charges for city services, and 26 percent relied on increased sales tax rates, income tax rates, and other taxes. Hate to hear about more taxes? Keep in mind, more has to go into city coffers because more is coming out—the study showed that increases in employee health care and wages, public safety needs, and pension costs had the most negative impact on the ability of cities to meet their fiscal demands for the year.

Next year's outlook depends on location. Finance officers in the largest cities were less optimistic about improving conditions than those in smaller cities, and those in the South were more optimistic than those in the Northeast, West, and Midwest. Also, officers in cities relying more on sales taxes were more likely to predict better conditions, versus those relying on property taxes and income taxes, according to the survey.