National League of Cities: If You Think Dallas’s ’09-’10 Budget Looks Bad, Wait Till Next Year

On August 10, when the Dallas City Council met to discuss City Manager Mary Suhm’s budget proposal that gut services and employees to make room for a $190-million budget shortfall, the city’s chief financial officer, Dave Cook, warned that next year’s process will be even more painful. He said that preliminary discussions with appraisal district officials indicated commercial property values would continue to decline; so too, most likely, will residential property values and sales tax revenues. Which means: Here we go again — except, Cook added, the upshot of this year’s cuts means there will be less to trim next go-round.

The National League of Cities this morning reiterates Cook’s warnings in its 2009 Fiscal Conditions Report, released moments ago. But long story short:

Since city fiscal conditions tend to lag behind national economic conditions, the effects of a depressed real estate market, low levels of consumer confidence and high levels of unemployment will likely play out in cities well into future years. National economic forecasts are not projecting immediate and substantial improvements in the nation’s economic conditions, meaning that the nation’s cities will most likely still be realizing the effects of the current downturn in 2010, 2011 and beyond.

According to the report, Dallas was hardly alone when it came to laying off employees and reducing services — 67 percent of the 380 cities surveyed by the NLC did precisely the same thing. And more than a quarter have done what Suhm’s proposing: upping water and garbage fees; another 25 percent raised property taxes. However, it notes, “Increases in sales tax rates (5 percent), income tax rates (1 percent), and other tax rates (6 percent) are less common.”