Report: Cuts to City Personnel Budgets Slowly Declining (Except Pensions)

Hiring freezes, furloughs and other personnel cuts are slowly beginning to taper off in some of the nation's cities, a new report finds.
by | October 11, 2013
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Deep personnel-related cuts that had accelerated during the Great Recession as local governments trimmed budgets are slowly beginning to taper off.

That’s according to survey data published Thursday by the National League of Cities (NLC) in a report examining a range of fiscal conditions across U.S. cities.

For workforce expenditures, the report offered mostly good news. While public employees in many cities still are incurring cuts, most types of personnel-related reductions declined slightly in 2013, following trends of the past few years.

The NLC survey found 38 percent of cities had implemented hiring freezes, down from 45 percent in 2012 and 74 percent in 2010. Wage reductions or pay freezes -- grouped together in the survey – recorded a particularly notable drop, falling from 32 percent of cities in 2012 to 15 percent this year.

NLC Executive Director Clarence Anthony told Governing he expects a “continued small increase” in public employee job creation for cities in 2014, rather than a more significant spike.

In the longer term, funding levels for personnel expenses will hinge, in part, on how states and the federal government act.

“If we can get straight policy out of Washington and some stability, I think America’s cities will feel comfortable and start creating the jobs we know we’re capable of doing,” Anthony said.

Seventeen percent of cities reported they had laid off staff in 2013. Nationwide, state and local payrolls have remained mostly flat this year, according to Labor Department data.

One area that did record a year-over-year increase was pension benefit reductions, implemented in 22 percent of surveyed cities this year. Officials, Anthony said, will continue to develop knowledge and expertise around the issue as they weight potential cuts.

“The question for cities is, at what level -- when you look at pension investment and commitments in your budget -- does an alarm go off?” Anthony said.

NLC received responses from 350 cities for the survey. The following chart shows the percentage of cities reporting personnel-related cuts in various categories over the past four years:

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