Cities Anticipating Recession

Local governments looking to plan for their upcoming budgets and financial forecasts are anticipating a recession in the near future. From Thursday's News-Gazette:

Financial officials in local governments preparing for a recession
Market jitters and slowing economic growth have public officials in Champaign-Urbana singing a similar tune: A recession is coming.

In Urbana, that means "challenging decisions," budget reductions and revenue increases could be coming if worse comes to worst, according to a financial forecast Urbana City Council members discussed Tuesday. The likelihood of a recession, the report said, "would undoubtedly have a negative impact on sales tax and other revenues."

Already the city is facing a three-year slowdown in sales-tax-revenue growth as more people shop online, the report said...

Like [Urbana Finance Director Elizabeth Hannan], who prepared the report to Urbana's council, city of Champaign Financial Services Manager Courtney Kouzmanoff said her city's staff also foresees a slowdown. In crafting financial forecasts, Kouzmanoff said Champaign always likes to use conservative growth numbers for its planning and look at how it has fared in past recessions...

Still, Kouzmanoff said she is optimistic that a recession won't hit Champaign hard, with future development still promising revenue growth...

Analysts are also concerned about the effects of recent state siphoning of taxes collected for municipal governments.

State diversion of local government revenue over the past several years has been curtailed from fiscal 2017 levels, the Urbana forecast said.

This coming year, the state will impose a 1.5 percent administrative fee on home-rule tax revenue and will divert 5 percent of the city's share of income taxes. Hannan said the state has also imposed a collection fee of sorts.

Full article here. Urbana had a presentation on its five year financial forecast this last week at their City Council meeting (Cheat Sheet post here, full video of presentation here) There was an overview of the global situation earlier in the week here, also in the News-Gazette via the Associated Press:

The world economy will be more sluggish this year, the International Monetary Fund warned Monday, citing trade disputes that have seen China slow to its weakest pace in 30 years as well as the impact of rising U.S. interest rates.

The IMF cut its forecast for global growth this year to 3.5 percent, from the 3.7 percent it had predicted in October and down from 2018's 3.7 percent...

The World Bank and the Organization for Economic Cooperation and Development have also downgraded their world growth forecasts.

More details at the full article here.