The Calm Before the Storm: Why Cities Must Focus on Fiscal Resilience 

On the surface, it may seem that many cities are in decent financial shape. Budgets are balanced, critical services are running, and post-pandemic recovery feels, for many, like it’s in full swing. The 2024 City Fiscal Conditions report from the National League of Cities (NLC) paints a picture of stability for the moment—but dig a little deeper, and a more complex story emerges. The short-term effects of federal aid like American Rescue Plan Act (ARPA) have masked deeper, systemic challenges in how cities generate and manage revenue. With those funds drying up, it’s clear that we’re on the cusp of a new fiscal reckoning. 

At first glance, cities appear to be managing well enough. But this is the quiet before the storm. The reality is that ARPA funds provided a temporary cushion, allowing many cities to maintain services and invest in much-needed projects. Yet as those funds sunset, the cracks in fiscal foundations will become harder to ignore. The question isn’t whether cities can keep their heads above water today, but whether they’re prepared for the challenges that are coming tomorrow. And make no mistake—those challenges are coming. 

Why the ARPA Moment Is Misleading 

The American Rescue Plan Act (ARPA) provided direct federal assistance that enabled cities to recover from the immediate fiscal shock of the pandemic. It covered budget gaps, helped expand services, and, in some cases, allowed cities to build up reserves. But as these funds phase out, cities face a harsh reality: the structural financial issues that existed before the pandemic haven’t gone away. 

The 2024 NLC report hints at this impending challenge. While cities have seen some recovery, much of this is attributed to the temporary infusion of federal dollars. Now, as federal aid disappears, cities will need to find new revenue streams, and quickly. The concern is that many cities are not prepared to do so at the scale required. 

The Long-Term Challenge: Revenue Diversification and Capacity Building 

This moment demands more than a simple pivot from one funding source to another. It requires a rethinking of how cities generate and manage revenue. The NLC report highlights several strategies cities are exploring—grants, public-private partnerships (PPPs), user fees, and innovative local taxes—but none of these will work without the capacity to manage them effectively. 

Too many cities are relying on outdated systems and fragmented financial processes. While they’ve been able to get by during the ARPA era, these methods won’t cut it when new sources of funding need to be secured and, more importantly, managed with precision. Building capacity is no longer a “nice-to-have”; it’s a “must-have” if cities are to thrive in the years ahead. 

At Euna, we’ve seen firsthand how cities that invest in systems for grant management, revenue tracking, and financial compliance are setting themselves up for long-term success. The cities that aren’t making these investments now will find themselves scrambling when the next economic shock hits. 

What Cities Should Be Doing Right Now 

The time to act is now, not when ARPA funds run out and it’s too late to adjust. Cities need to focus on several key areas to ensure they are financially prepared for what’s next: 

Diversify Revenue Streams: Cities can no longer rely on a limited set of revenue sources. Grants, public-private partnerships (PPPs), user fees, and local tax innovations are all part of the puzzle. But these must be implemented in a way that doesn’t burden residents or businesses disproportionately. 

Build Capacity for Grant Management: Grants are a lifeline, but only if cities can navigate the complex application and compliance requirements. Cities need systems in place to track funding, ensure accountability, and maximize the impact of these resources. 

Invest in Technology and Systems: Financial management can’t be a patchwork of spreadsheets and manual processes. Cities need modern tools that provide real-time insights into their fiscal health, help forecast future needs, and ensure compliance with funding requirements. 

Foster Cross-Sector Partnerships: Public-private partnerships (PPPs) offer a powerful way to fund large-scale projects, but they require cities to be proactive in collaborating with private industry. This means building the expertise and relationships needed to ensure these partnerships deliver value over the long term. 

These aren’t optional steps—they are the foundation of fiscal resilience. The decisions cities make today will determine their financial health for decades to come. 

The Danger of Complacency 

There’s a real danger in the current sense of fiscal calm. The NLC report shows that many cities feel they are on stable footing, but this confidence is often built on temporary, one-time funding that will soon disappear. Without significant changes in how cities approach their finances, we could be setting ourselves up for a much larger crisis down the road. 

City leaders cannot afford to be complacent. The time to build resilience is now, while there is still a buffer. Relying on short-term solutions and hoping the economy holds isn’t a plan—it’s a gamble. And when ARPA funds run dry, the cities that have failed to diversify their revenue streams and build their capacity for financial management will be left scrambling. 

A Call to Action 

City leaders need to take an honest look at their fiscal strategies. It’s time to acknowledge that while things may seem stable now, the underpinnings of that stability are fragile. Cities need to move beyond short-term fixes and invest in long-term solutions that will see them through the next economic shock—and the one after that. 

At Euna, we’ve developed a strategic planning playbook that helps cities build the capacity they need to secure and manage new revenue streams effectively. This includes: 

  • Developing internal grant management teams that can navigate the complexities of modern funding. 
  • Implementing technology solutions to provide transparency and ensure compliance with evolving regulations. 
  • Fostering partnerships with the private sector to share both risks and rewards. 
  • Creating frameworks for revenue diversification, so cities aren’t reliant on a narrow set of funding streams. 

We believe cities can do more than just survive—they can thrive. But only if they start planning for the future today

The fiscal storm is coming. Will your city be ready?

 


Abhi Nemani is a government technology entrepreneur, scholar, and public servant, with over 15 years experience leading GovTech institutions inside and outside of government. As Senior Vice President of Product Strategy at Euna Solutions, Abhi stewards the portfolio of public sector technologies that boost trust and transparency for 3,000+ governments globally.

Prior to Euna Solutions, Abhi Nemani co-founded Code for America, driving local government innovation and shaping national strategies. As Los Angeles’ first Chief Data Officer, he advanced urban transparency and performance. In Sacramento, he launched the Innovation & Growth Fund. He co-chaired Governor Newsom’s Tech & Innovation Committee and founded EthosLabs, supporting GovTech startups.

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