California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

The National League of Cities has released their annual report, ‘City Fiscal Conditions 2008. 
The report illustrates that the nation’s cities have been impacted by the perfect storm involving
home foreclosures, declining home values and spiraling costs such as those for gasoline.

The report found that the decline in property tax revenues (3.6 percent from the prior year, in
inflation-adjusted terms) is having an impact on the fiscal health of local governments. The
report found that other sources of revenue are headed downward as well, with sales tax receipts
declining by 4.2 percent and income tax revenues expected to decline by 3.3 percent in inflation-
adjusted dollars in 2008 compared to 2007. As a result, 64 percent of city finance officers surveyed
expect cities to have a harder time meeting fiscal needs in 2008, and 79 percent forecast even
bigger problems ahead in 2009.

The pessimistic assessment is registered regardless of city size. Sixty-nine percent of the nation’s
largest cities reported a lessening ability to meet needs, 68 percent for cities with populations
100,000-299,999, 65 percent for cities 50,000-99,999, and 61 percent for cities with populations
under 50,000.

Regionally, cities in the West are being hit hardest, with 74 percent of finance officers stating that
their cities are worse off in 2008, followed by cities in the Midwest (67 percent), Northeast (61 percent)
and the South (53 percent).

I am Tim Johnson and this has been the California Business Minute.