A National League of Cities report on city fiscal conditions shows that many are at a crossroads.

Things are doing well fiscally now, but next year could be quite the challenge.

"Three years after the pandemic outbreak, cities have recovered and have maintained a largely positive outlook about their near-term fiscal future," wrote the NLC, based on an analysis of data from 820 cities and responses from 533 city finance officers. They found four major points: • Cities learned that being cautious in their budgeting left them with increased reserves and limited spending in 2023. • With planning, inflation turned out to be easier to manage and the average city saw a 6% increase in general fund revenues. • Direct federal aid through the American Rescue Plan Act (ARPA) and the bipartisan infrastructure law turned out to be important to some cities' ability to balance 2023 budgets, as 16% of respondents said that the aid had a positive impact. • Cities continue being cautious because of concern over the end of federal aid going forward. The picture is complicated. "The past several years have been challenging for America's cities, towns, and villages but also full of opportunities and achievements," they wrote. "Despite facing abnormally high levels of inflation during 2022, cities have seen their tax values surge as post-pandemic economic activities picked up, property values rose, and unemployment rates dropped to historic lows."