Budget Woes Strike Most Major U.S. Cities

From furloughs to tax cuts, there is a wealth of ideas to fix city budgets.

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Los Angeles

With his $6.9 billion fiscal year 2011-12 budget, which the city council passed in May, Mayor Antonio Villaraigosa closed a $336 million shortfall, with large cuts coming from the police and fire departments. The budget also cut $19 million from the Recreation and Parks Department and reduced funding to homelessness programs by 10 percent.

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The city faces a possible deficit of $50 million for its $500 million fiscal year 2012 budget, which must be approved by September 30. As Mayor Tomas Regalado tells U.S. News, the city is planning to counteract this problem by cutting property taxes in an attempt to spur investment. "Last year, when we also faced a budget deficit, we did not increase property taxes, and we have seen a lot of investment in the city of Miami in the past 12 months." By cutting taxes, Regalado hopes to accelerate that pattern. But Miami is expecting increased revenue elsewhere, including $2 million via increased fees at the city's marinas, plus another $2 million expected to come from cameras that catch motorists who run red lights.

New York City

In June, Mayor Michael Bloomberg and the New York City Council agreed on a budget they touted for not increasing taxes. The city's 2012 budget shortfall had been projected at $3.26 billion, but the mayor worked over the course of the last year on a program he called PEG, or the Program to Eliminate the Gap. Along with the use of funds from its reserves, New York City was able to achieve a balanced budget for fiscal year 2012. However, more fiscal wrangling likely awaits, as a nearly $5 billion deficit has been projected for next year.

San Diego

The city's most recent financial outlook report, released in February, projected its general fund budget shortfall for fiscal year 2012 at around $56.7 million. To balance this year's $1.13 billion general fund budget, the city has proposed 6 percent pay cuts for employees, and has eliminated the equivalent of 120 full-time positions, some of which were already vacant.

San Francisco

On June 1, San Francisco Interim Mayor Edwin Lee presented a $6.8 billion budget proposal that aims to close a projected $306 million shortfall. That shortfall is driven by growth in employee benefit costs as well as a loss of revenues from both the state of California and the federal government. One way the city is saving money is by forgoing scheduled pay increases for city employees, at a savings of $20.2 million. The city has also instituted a hiring freeze, to generate savings on salaries as older employees retire.

Washington, D.C.

The District of Columbia faced a projected $322.1 million shortfall for fiscal year 2012, which it closed with a roughly 60-40 ratio of spending cuts to revenue increases. But the nation's capital faced some unique challenges in closing that gap, according to a spokesman for the mayor's office. For example, as the capital of the United States, the city cannot choose to impose a commuter tax. The city council has considered attempting such a move on numerous occasions, despite the fact that in 2005, a federal court ruling stated that the district is subject to the will of Congress, and thus cannot impose such a tax itself. The city instead increased its parking garage taxes in the 2012 budget. Mayor Vincent Gray also proposed a 0.5 percent income tax increase on all residents earning $250,000 or more, a plan that the city council shot down.

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