City governments throughout the United States collect revenue from a variety of sources including taxes, user charges, intergovernmental payments, and various other sources. Depending on specific services offered by the City and the unique regulatory and political environment the specific source of revenue can vary considerably from government to government. GFOA has prepared the following revenue dashboards for cities with populations over 10,000 from publicly available United States Census Bureau data.
Major Revenue Sources for U.S. Cities
The following image shows revenue sources for all city governments in the United States with populations greater than 10,000. The top image shows aggregate revenue and can be filtered by state or population size. The bottom image can be filtered to highlight any specific city.
Source: U.S. Census Data (2017)
For all cities in the U.S., the largest revenues sources are 1) user charges, 2) property taxes, 3) intergovernmental aid from the state, and 4) sales and use taxes. For many cities, a large portion of the budget goes to provide "enterprise services" such as water/wastewater services or other utilities, parks and recreation programs, or other services where customers are charged for consumption of the services. Other large sources in the aggregate are representative of both the large portion of city revenue coming from those sources and the popularity of these revenue sources across the entire United States.
Individual revenue diversification in any one city will vary and GFOA has noted trends for cities by population size and specific state.
Revenue from Local Taxes
The following interactive dashboards show the portion of revenue collected from local taxes, including property taxes, sales and gross receipts taxes, local income taxes, and excise taxes. In addition, the charts show how common it is for cities to rely on each revenue source.
Note: If revenue is collected at the state level as a tax (for example as a sales tax) and then distributed to city governments at a later point, that revenue has been categorized as intergovernmental aid.
Source: U.S. Census Data (2017)
When displaying how city governments across the United States use taxes to generate revenue, several themes emerge. Below is a list of GFOA observations related to the diversity of local government revenue.
- Reliance on revenue as a source of revenue tends to be greater among areas with higher population density, but cities in Alabama, Colorado, South Dakota, and Texas seem to rely more heavily on taxes than their peers.
- Cities in New Jersey, South Dakota, and Texas see property taxes make up a larger share of revenue than cities in any other states. Conversely, the majority of cities in Oklahoma collect no revenue from property taxes.
- Many cities in the Midwest, Northeast, and Northwest specifically do not depend on sales and gross receipts at city level. However, in cities may still benefit indirectly from sales and gross receipt taxes in funding provided from their state.
- Few states, such as Alabama, Indiana, Kentucky, Maryland, Michigan, Missouri, New York, Pennsylvania, allow cities to collect a local individual income tax. Of those, only Indiana, Kentucky, Maryland, Missouri, New York, Ohio, and Pennsylvania have cities that collect a local corporate income tax.
Revenue from Other Governments
The dashboards in this section show the revenue generated by cities with populations greater than 10,000 from federal and state assistance programs. In many cases, the revenue is tied to specific services the city provides.
Revenue from User Fees and Charges
User charges and fees result from enterprise type activities and specific services provided to customers in exchange for a payment. Revenue aggregated as a user fee or charge includes utilities fees for water, wastewater, gas, electric or solid waster services, transit operations, tuition, highway tolls, parks and recreation programs, and other fee based services provided by cities.
Revenue from Fines
In addition to user charges, governments collect revenue from fines and forfeitures. Unlike user charges or fees, fines generally should not be used with the goal of raising revenues. Rather, fines are meant to punish transgressors and deter potential transgressors. Forfeitures are when a citizen’s private property is confiscated. Similar to a fine, forfeitures are used as a deterrent or punishment. Unlike fines, the resource taken from the citizen may not be monetary— a citizen might forfeit other types of property.
The following dashboards indicate the share of revenue for each city that is generated from fees and forfeitures including a highlight for the cities that generate more than 10% of their revenue from this source.