Cities Must Cope with
‘New Normal’ to Avoid
BY DAVID A. RICHARDSON, CONSULTANT
The economic downturn has greatly impacted city governments from coast to coast. A “new normal” is
still being defined, and organizations
have been scrambling to deal with this
phenomenon. This article discusses
how this new normal came into
existence, how cities have reacted
so far, and how they should position
themselves to flourish in the future.
Many of the examples provided are
Illinois-based but are likely applicable
from state to state with some variations.
building fee revenues, a source that
is not as reliable in bad economic
times, also flowed during the 1990s.
Growth associated with increased
economic development also brought
increased property tax levies.
period. Public sector unions curried
favor with state legislators while
working on political campaigns and
gained greater negotiating rights.
Since there often is a major disconnect
between state-imposed legislation
and a city’s ability to pay for such
mandates, it was only a matter of time
before increased salary
and pension costs would
begin to put many cities
in financial distress.
Many cities benefited from financial
and economic growth throughout
the 1990s. Because the U.S.
economy grew consistently
throughout the decade,
higher sales and property
tax revenues. Increased
At the same time, many cities viewed
these better economic times as an
opportunity to expand services beyond
those typically undertaken by local
governments. Social service grants and
new recreational amenities, such as
municipal golf courses, were common
additions to traditional municipal
activities. While some money was
allocated to typical capital projects,
such as road and bridge repairs, many
of these projects were legacy-induced
rather than practical in nature, such as
new opulent and oversized city halls.
In addition, organized labor
became very powerful
Two significant events
in the 2000s began
to reshape financial
First there were the
September 11, 2001,