We appreciate and sympathize with House budget writers’ efforts to maintain essential services in these challenging fiscal times.

Cities face the same challenges.

Last year the state shared approximately $100 million in revenues with cities. These revenues help support local general-funded services – mostly public safety expenditures. That translates to $23.20 per capita among the 4.3 million people living in our cities.

The House Democrat budget proposal reduces local government state-shared revenues by approximately $80 million.  Of that, cities will lose liquor tax revenues and municipal criminal justice assistance account funding effective December 31, 2012. These shared revenues account for approximately $18.5 million for the remainder of the biennium. The bulk comes from elimination of state-shared liquor taxes, which go into city general funds and are distributed on a per capita basis. This practice has been in place for almost 80 years. These reductions are intended to be permanent and would result in a loss of state-shared revenue of approximately $68 million for the next full biennium.

Under this proposal, these revenues would be shifted to support county public health services now supported by both state and local funds. It appears the proposal would shift these funds permanently rather than only during this period of economic downturn – a concern to cities.

The proposed budget assumes passage of a number of new local revenue options to help offset these reductions and allow cities and counties to shoulder more of the costs of services to our residents and businesses. It is still very early to know if any of these local revenue options have the necessary support to be adopted. We expect ongoing negotiations about potential local revenue options.

For cities, all are new councilmanic sales tax options – something just as difficult to pass at the local level, as it is at the state level. If authorized, some jurisdictions may be able to use one or more of these options – we’re asking today for feedback from cities to get a better read on their viability; however, new taxes probably will not be viable for many cities. Absent from today’s budget release was any mention of actions the state can and will take to reduce costs to cities, to offset these cutbacks in funding. The state places numerous mandates on cities relating to how to conduct business and what must be funded. We’ve proposed a number of ideas that could allow for lower costs to cities, without sacrificing essential services. We strongly urge they be included at the same time the state is eliminating longstanding funding.

Last week House Republicans released their version of a proposed supplemental budget. It will be used in negotiations among budget leaders as they hammer out something to address state budget challenges.

The Senate will release its version of the budget later this week which is expected to have a number of differences from the House. We will continue to review the proposals as they become available. Watch for more information as we work to analyze the impacts to cities.  

For more information, please contact either Dave Williams or Victoria Lincoln at AWC.