Three out of five cities say revenues are not keeping pace with increasing fiscal demands, according to City Fiscal Conditions in 2004, a new report from the National League of Cities (NLC). Nashville can be considered one of those cities.

Only Hendersonville and Springfield responded to the survey from Tennessee but Metro Finance Director David Manning said he would place Nashville in that group.

Increases in spending for public safety and infrastructure, when coupled with the rising costs of employee health benefits, pensions and wages, are listed as contributing factors for the financial woes most cities are facing.

“This is the third year in a row where we’ve seen these types of revenue declines,” said NLC Vice President James Hunt, also a councilman from Clarksburg, W.V.

“As elected officials, we can only stretch our resources so far, tighten our belts so much. We have huge responsibilities we must address and simply not enough resources to support them.”

In total, 61 percent of responding cities reported they will be “less able” to meet financial needs in 2005 than in this year, although 52 percent of cities in the South felt their cities’ financial condition in 2005 would be better than 2004.

“The South is generally, I think, more optimistic than the rest of the country,” Manning said.

When asked to list three items having the most negative impact on their ability to meet needs, cities responded that employee health benefits have the most negative impact (58 percent), costs of employee pensions followed with 31 percent, infrastructure needs came in at 26 percent, reduction in state aid was 22 percent and strength of the local economy 13 percent.

Manning said, in addition to health and pension benefits, state aid would be a big factor in Tennessee.

“I think health and pension benefits are always there and the other factor that stands out for us is the effect that state decisions to reallocate state-shared taxes have had on our ability to finance programs locally,” he said. “That certainly has a negative impact on Tennessee cities and counties.”

Only 43 percent of cities in the South reported deteriorating fiscal conditions as compared to 75 percent of cities in the West, 74 percent in the Midwest and 59 percent in the Northeast.

As for a possible property tax increase, Manning said the city did a number of fee adjustments in the last budget cycle to increase revenues and it is still far too early to project a financial outlook for the next budget cycle.

“We will be in the process this fall of evaluating the next period of time, probably the next two or three years because that is the period of time for which the reappraisal that will occur this year will cover,” he said.

“We’ll put those numbers together, evaluate them, discuss them with the mayor and the council in the spring and make a decision.”