Predicting the Impact of the U.S. Housing Crisis and "Great Recession" on Central City Revenues

Using data from 1983 to 2009 on revenues, housing prices, and incomes, we forecast the impact of the U.S. housing crisis and "Great Recession" on the revenues of the nation's largest central cities for 2009-2013. We develop the concept of constructed cities, to allow valid comparisons across cities in light of varying expenditure responsibilities of city governments. We predict that general revenue per capita in the average central city will decline in real terms over the 4-year period by 3.5 percent. The largest revenue reductions occur in constructed cities where housing prices fell substantially and state aid was sharply reduced.