Cities Facing Worst Fiscal Situation Since 1980

For the first time since 1980, both property tax revenue and state aid to local governments are declining at the same time. While cities and counties used to be able to count on at least one of those remaining positive, this current state of double decline is creating the most significant strain on the finances of local governments in a generation. And things probably aren't going to get much better any time soon.

This dismal situation is explained in a new report from the Pew Charitable Trusts' American Cities Project, which looks at how both state aid and local property tax revenue have sharply declined in recent years. It's a problem that's making things even harder for the roughly 90,000 counties, cities and school districts in the U.S. as they struggle to provide services and aid that's now in much higher demand than before the economic downturn. These two funding sources typically amount to more than half of city revenues, and to have them both declining at the same time is like taking a city's wallet and then punching it in the stomach.