Business Watch

U.S. CITIES IMPROVE FINANCIAL STATUS

Most United States cities recorded improving financial conditions during 1994, according to the National League of Cities, Washington, in its annual survey of city fiscal conditions. Of the 417 cities responding to the NLC survey, 72 percent indicated that their general fund revenues exceeded expenditures for 1994. That figure compares with 69 percent for 1993; and 50 percent for both 1991 and 1992.

"These financial indicators generally reflect the cycles of economic activity that exist in our cities, but we must also consider the context of those conditions," says Carolyn Long Banks, NLC president and councilwoman-at-large of Atlanta. "The survey doesn’t answer the question, ‘Compared to what?’ Being able to balance the city’s checkbook is only one part of the process. What may have gone into doing that – cutting services or neglecting needs – is another. And some of those needs, especially infrastructure, cannot go unmet indefinitely without running the risk of greater costs later."

The most common actions taken by cities were reducing the growth rate in operating spending (51 percent); increasing the level of fees/charges (48.7 percent); contracting out services (39.9 percent); improving productivity levels (37.7 percent); and reducing the actual level of capital spending (31 percent).

The least common actions taken by cities all involved taxes. Only 0.5 percent of cities increased income tax rates; 3.2 percent expanded their tax base; 3.8 percent increased sales tax rates; 5.9 percent implemented a new tax or taxes; and 6.8 percent increased rates of other taxes.

NO RECESSION IN 1995 OR 1996

The American Production and Inventory Control Society Inc., Falls Church, Va., says that the chances of a recession developing either this year or next are almost nonexistent. The APICS points to two consecutive monthly gains in its Business Outlook Index that tracks manufacturing shipments, employment, production, inventory stocks, new orders of durable goods and unfilled orders and inventory-to-sales ratios. Also, the most recent data strongly suggests that housing and consumer spending have bottomed out and are starting to improve again, according to the Society. Department store sales and motor vehicle sales also have been rising, posting gains in both May and June.

HOUSING MARKET IMPROVES