Why U.S. Cities Grapple With Finances?

Which U.S. cities are lagging behind according to selected 2012 measures of fiscal health. (The Wall Street Journal)

According to The Wall Street Journal, American cities’ fiscal health is lagging behind other sectors of the economy as the recovery slowly takes hold.

Buffeted by steep drops in state aid, rising pension and health-care costs and sluggish property-tax revenue, many urban centers are struggling even several years after the financial crisis.

“We think we saw the bottom, knock on wood,” said Robert Chisel, director of finance and administration for Reno, Nev. But, he said, “We’re not going back to the old days. We all know that.”

Local officials hasten to distinguish their cities from Detroit, which this summer became the largest-ever U.S. municipal bankruptcy case. Most won’t get to that point: just 63 cities, towns and villages, including Detroit, have filed for municipal bankruptcy protection since 1954, said Chicago lawyer James Spiotto, who tracks the sector.

But an analysis by The Wall Street Journal of financial data from the nation’s largest cities shows that many of them are wrestling with the same types of issues that sank Detroit. The data were provided by Merritt Research Services LLC, an Iowa research firm that mines cities’ financial filings. Merritt examined 2012 filings from the 250 largest U.S. cities by population. A handful, including Baltimore, Milwaukee and Dayton, Ohio, weren’t available by August 2013, when Merritt collected the information.

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