Cities Hiring Most Since 2008 as Economy Eases Strains

More U.S. cities are hiring than at any time since the Great Recession as the reviving economy and rising property taxes allow higher spending for a second straight year, according to a report released today.

One-third of cities and towns expanded their workforces this year, compared with reductions in 18 percent, according to an annual survey by the National League of Cities.

This is the first year since 2008 that job additions outpaced cuts. The gains come as 80 percent of cities said their financial position is stronger than a year ago, the most in at least 29 years.

“Growth in those jobs is a good sign for the economy,” said Christiana McFarland, the research director for the Washington-based league. “Things are going in a positive direction.”

The shift erased a drag on the nation’s recovery that persisted after the recession ended in 2009, as shrinking budgets prompted municipalities to fire police officers, firefighters and other employees.

Yet while local governments added 113,000 to their payrolls since March 2013, they employ 482,000 fewer people than in July 2008, according to the U.S. Labor Department.

“When you pull back the layers, you still have a way to go before you see a full recovery,” said McFarland. “When you put it in the broader context of how far city finances sunk during the Great Recession, they still have a ways to come out.”

Home Prices

With the economy accelerating and home prices rising, tax collections have increased. Property taxes rose 1.6 percent during 2014, adjusted for inflation, according to the survey of 354 cities conducted from April to June.

Sales taxes rose 3.6 percent this year after a jump of 4.6 percent a year earlier. Income taxes gained 0.6 percent, slowing from a 4.3 percent increase in 2013.

Cities continue to face pressure from underfunded pensions, health-care costs and the need to spend more on infrastructure. Total revenue growth failed to keep pace with rising costs and dropped by 0.5 percent in 2014 when inflation is taken into account. Spending growth rose by 1 percent on that basis, less than half the rate a year earlier, according to the report.

“Revenues are just not keeping pace with expenditure demands,” said Tom Kozlik, a municipal bond analyst for Janney Montgomery Scott LLC in Philadelphia. “There’s a lot of things local governments want to do. They just don’t have the money to do it.”

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