The biggest roadblock to city recovery goals. Plus: Budget impacts of inflation and poor pension returns.

Happy Finance Friday! This week’s newsletter is all about budgets. I take a look at spending priorities and challenges for the nation’s cities, the latest on inflation and the volatile stock market’s impact on pension funding.

Photo by Pedro Lastra on Unsplash

‘State of the Cities’ highlights recovery goals

The National League of Cities released its annual State of the Cities report this week and it’s clear that the pandemic and federal funding opportunities are shaping the vision and goals of mayors across the country. Infrastructure, economic development, budgets/management and  public safety were identified as the top issues for city leadership.

The biggest theme throughout the report, which analyzes mayors’ annual “State of the City” addresses, was equity. This is undoubtedly because of the systemic inequities that the Black Lives Matter movement and the pandemic turned into front page news in recent years, but equity is also a key priority in both the American Rescue Plan Act and the Infrastructure Investment and Jobs Act. 

“We are using an equity lens to strategically invest in programs, services and infrastructure that will help us along our path to full recovery in a way that will make a difference in the quality of life for EVERY SINGLE Tucsonan,” Tucson Mayor Regina Romero said in the report.

Health and human services is also an issue that’s rising in importance, likely due to its direct connection to things like mobility, equity and environmental justice. “Attention to green spaces and expansion of parks and recreational areas are at the top of the cities’ lists as more communities embrace a ‘car-free’ lifestyle and more sustainable urban planning,” the report said. 

The takeaway: Cities are doubling down on the lessons learned during the pandemic with their focus on equity and inclusion, open space and its relation to health, and creative approaches to housing sustainability. But staffing shortages remain a key challenge in the recovery. It didn’t show up as its own priority issue in the report, but that’s not surprising given that mayors tend to avoid a State of the City address that sounds like a doomsday speech. 

But—hiring and retention was one of the top five budget and management subtopics, and the No. 1 subtopic in public safety. In other words, those charged with protecting the public purse and the public itself might not have enough people to do their jobs to the fullest. When peoples’ money and safety are vulnerable, that puts governments at risk of losing the public’s trust. City leaders may not want to make speeches about it, but if they haven’t started rethinking their approach to attracting talent, now is the time.

Read more:

• The Great Resignation’s Impact on Local Government

• Why I Left My Local Government Job

Blame inflation

State revenue growth is starting to cool off thanks to inflation, the Urban Institute’s Lucy Dadayan reported recently.  While still robust (see figure below), the numbers aren’t as high as they have been over the past year.