At least 20 of the largest 25 cities in the U.S. are facing budget stress as federal support to states is under duress and the Trump administration is threatening to expand National Guard involvement in crime fighting operations.
"Big cities are suffering from many of the same maladies as other state and local governments: rising costs, revenue sources struggling to keep up, reduced federal support, and increased fiscal and economic uncertainty."
The findings come from research conducted by Josh Goodman, senior officer, state fiscal health for the Pew Charitable Trusts.
"As these challenges build, city leaders are beginning to turn to state officials for funding and financial flexibility, but how much help will be forthcoming is an open question," said Pew. "Many states are struggling with their own budget deficits."
Public finance has already been affected in Washington, D.C., Baltimore, Dallas, Chicago, Los Angeles, and San Francisco in the form of credit rating downgrades.
Denver, Houston, and Jacksonville are all reckoning with budget shortages through layoffs, tapping reserves, or by going to the polls for tax increases.
The struggles are a slow rolling set of financial challenges that date back to pandemic funding flowing into municipalities from the America Rescue Plan.
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The Trump administration is adding to urban stress levels by threatening to send the National Guard into other cities including Baltimore and New Orleans to fight crime.
The Guard has been on active duty in Washington with over 2,200 troops stationed in the city. It's estimated the operation is costing the federal government about $1 million a day.
Local businesses in the city are blaming a drop in foot traffic on the Guard's presence.
States typically help support city finances while exerting some level of control over municipal tax rates.
The One Big Beautiful Bill Act changes the way the federal government supports state Medicaid programs which is already having negative effects on
According to Pew, Phoenix, Arizona is facing a 2026 budget deficit because the state cut income taxes and repealed a residential rent tax. The city has now raised the local sales tax to make up the difference.
New York City is wrestling with a deficit being partially blamed on a state law that reduces the size of school class size.
Chicago has tried unsuccessfully to get the state to help with money for the city's schools and California has put the brakes on sending unlimited funding to Los Angeles for fire recovery.
In addition to schools and natural disasters, municipalities are also getting squeezed by stubborn inflation levels.
According to the Center on Budget and Policy Priorities, "Local governments are experiencing fiscal crises of their own, grappling with significantly higher costs in health care, pensions, construction, and infrastructure improvements related to climate change."
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"Faced with higher costs and reduced support from state and federal governments, local administrators have little choice but to turn to property taxes to meet their communities' needs."
