Fiscal realities and economic development financing were the themes of two popular sessions at the National League of Cities Congress of Cities in Seattle last week, reflecting concern with both budget and growth issues – and how each supports the other.

The program on “Fiscal Realities, Innovative Solutions” featured presentations by city leaders from Cincinnati, Las Vegas and Houston – three very different places, but all dealing with a budget environment in which “flat is the new up.” As moderated by Chris Hoene, Executive Director of the California Budget Project, this session offered a deep dive into the constraints and policy options influencing revenues, expenditures and reserve levels. Several consistent themes emerged:

• Priority-based budgeting is a valuable tool during trying fiscal times. Speakers agreed it is critical to set priorities, even if various constituencies are reluctant to sign on to this approach. (Read more about this leading practice budgeting strategy on ICMA’s Center for Management Strategies website.)
• It is more important in times of fiscal duress to be transparent and provide quality data to the community to guide budget debates. If the set of budget choices is laid out clearly and is supported by good data from a respected source, it enables a more respectful, careful discussion of options.
• The budget, political and economic environment are constantly changing. City budget officials need to try different options to find what works. First choices may not be accepted so leaders need to be willing to pursue alternatives.
• Constant cutting without an eye to future economic growth is not a good option. Given the reluctance to raise taxes or cut services, growth in the business and tax base is really the only way cities will be able to move beyond the fiscal crunch.

Economic development becomes ever more important in this environment. Not surprisingly, then, the Economic Development Financing Tools session was standing room only. This session addressed finance options for economic development, innovative public-private partnership strategies, and using incentives to achieve community goals.

Toby Rittner of the Council of Development Finance Agencies (CDFA) described a broad range of financing tools available to communities for many sets of activities ranging from infrastructure investment to support for entrepreneurs. CDFA offers information and training on how to use each of these tools. Mayor Melodee Colbert-Kean discussed innovative financing strategies and public-private partnerships in the rebuilding of Joplin, MO after a tornado destroyed much of the town in 2011.

I led the discussion on incentives, which emphasized tools and criteria for assessing the community impact of incentive projects. In addition to discussing the merits of project benefits, fiscal impact and economic impact analyses – all pre-decision assessments -- the conversation turned to managing incentives after the fact. Communities are concerned by the challenges in monitoring compliance with incentive agreements, determining whether expected project benefits were achieved, and evaluating the overall effectiveness of incentive programs in meeting economic development goals. Solutions to these challenges will continue to be explored moving forward.

If you are interested any of these topics, please contact the Center for Sustainable Communities to learn more about how ICMA can help.