Thursday, April 30, 2009

Housing foreclosures and failing businesses take toll on city finances
The nation’s economic recession, the decline in the housing market, and the recent crisis in financial markets have muddies city fiscal prospects in a variety of ways, according to a new study released yesterday by the League of Minnesota Cities. The 2009 State of the Cities Report shows that all of those trends have hampered the ability of Minnesota cities to fund and provide basic services to residents and businesses.

According to the Report, the most frequently identified problems by cities as a result of the general economic downturn are an increase in unpaid residential utility bills, an increase in unemployment among residents, a decrease in building permit revenues, and an increase in unpaid property taxes. Additionally, more than 26 percent of cities reported an increase in business closures in their communities. These statistics are particularly sobering since cities are also facing substantial cuts in local government aid and market value homestead credit reimbursements.

City officials identified the most frequent foreclosure-related problems as delinquent utility services fees and taxes and collection of delinquent utility bills, property maintenance issues, delinquent property tax payments, and declining property value. Earlier this month, the League released preliminary findings from the fiscal conditions survey portion of the State of the Cities Report.