Local government economic struggles mirror those of the nation, according to a quick poll conducted by ICMA in September. Decreasing revenue from property tax, sales tax, new construction permits, sluggish sales of new and older homes, and fuel transportation costs all contribute to local government economic anxiety.

The 339 city and county managers responding to the ICMA quick poll indicate that they are taking action to mitigate the effect of these declining revenues by freezing vacant positions (55%), reducing service hours (39%), sharing services with another local government (36%), and eliminating delivery of non-required services (34%). Nearly 70% of local governments have increased or added user fees for services, and close to 40% are rescinding previously approved capital expenditures. Thirty-five percent of local governments have increased the rates of those taxes that show a decline in revenue, such as sales, property, and utility taxes. Of local governments that report increasing taxes, property tax is reported by the highest percentage of respondents (59%).

Only 31 local governments report permitting the use of golf carts on city streets as a cost-saving measure, but those that do are across the country—from Wisconsin to Missouri, California to Alaska, and from Pennsylvania to Texas.

Although some local governments report four-day work weeks, only 23% report that cost savings for the local government was the motivation, but a slightly higher percentage (26%) indicate that fuel savings for the employees was the primary motivator. Several local governments report a four-day work week as a useful retention and recruitment tool. One local government has reduced the workweek and the office hours of the local government to four days with hours from 7 a.m. to 6 p.m., Monday through Thursday, which has resulted in a utility savings of 20%.

The weak housing market has so severely affected property tax revenues that unlike the 2001 economic downtown, those revenues cannot buffer the effects in declining income and sales tax receipts and will most likely have an impact on city budgets until 2010, according to a related report issued by the National League of Cities (NLC) in September. City Fiscal Conditions 2008 also focuses on the “perfect storm” of “rising home foreclosures, declining home values, and spiraling costs, such as the increasing cost of health care premiums” that currently plague local governments.

Executive Director Robert O’Neill references the ICMA survey in his October Governing Management Insights column. He discusses how there are no miracle cures to what ails the current economic situations of our cities, towns, and counties. Instead, O’Neill describes how local leaders must focus on the strategic big picture and cites six characteristics that distinguish those government organizations that are able to weather the economic storm from the rest of the pack:

1. Establishing an early-warning system to discern which environmental trends and factors will have an impact on strategy and timing
2. Reacting quickly to those trends and factors
3. Having "migration" strategies in place early to weather the storms of changing environments
4. Understanding community values and making choices based on priorities
5. Applying the rigor required to determine whether programs are working
6. Never being satisfied with the current level of performance.

As economic challenges continue to confront our local governments, residents, and businesses, ICMA seeks information on creative strategies that local governments are implementing in response. If you have programs that you would like to share, please send descriptions to Evelina Moulder at emoulder@icma.org