NLC lays out uncertainty over federal support

“With the conclusions of ARPA and BIL funding our mayors know that they are facing a fiscal cliff,” said Christine Baker-Smith, director of research for the NLC. “They are building contingency funds, emergency funds that may have been depleted during COVID,” she added.

NLC

The National League of Cities surveyed 230 city mayors and scraped data from their speeches during the first quarter of 2025 in a pulse-taking exercise that lays out public finance challenges to come.

“With the conclusions of [American Rescue Plan Act] and [Bipartisan Infrastructure Law] funding, our mayors know that they are facing a fiscal cliff,” said Christine Baker-Smith, NLC director of research.

“They are building contingency funds, emergency funds that may have been depleted during COVID,” she added. “They are also acknowledging the fact that they are going to be receiving fewer federal funds and looking to states and private providers for additional financial assistance for their work.”

The comments came during a discussion coinciding with NLCs annual report on key issues affecting municipalities across the country.

Federal funding from ARPA ended in December 2024. Money from BIL, also known as the Infrastructure and Jobs Act will end September 30, 2026, when all funds need to be obligated.

The Trump administration has put its own stamp on grants still in the pipeline by eliminating some diversity, inclusion, and equity requirements and in some cases pausing funding while establishing its own review policies.

The mayors surveyed for the NLC report cited economic development as their top priority for the year, with 34% laying out the challenges of workforce development and reinvesting in distressed downtown areas.

Public Health and Safety accounted for 18% of responses, housing came in at 16%, infrastructure was cited by 12%, while budget/management was noted by 8%.

The Trump administration and the Biden administration both moved to shore up support for the housing sector. BIL attempts to spur transit-oriented development, which includes housing.

The One Big Beautiful Bill removed restrictions on low income housing tax credits which rely on private-activity bonds. LIHTCs are a key element in the capital stack needed to develop affordable housing.

“We have a huge affordability issue in my community,” said Mayor Angela Birney of Redmond, Washington. ” An average home in Redmond costs $1.42 million. We’re really invested in creating transit-oriented development around our four new light-rail stations in my community.”

The city tapped LIHTC funding to build 280 units of affordable housing near a light-rail station that is set to open this year.

Redmond is also wrestling with a major infrastructure project: replacing aging asbestos cement pipes.

“We as a city could never do that alone,” said Birney. “We can only put in so much investment from our community. We really rely on the federal government to come in and help.”

Some mayors are seeing obstacles to funding happen one level up in the government chain.

“I like to consider the state house like the Death Star,” said Mayor Riakos Adams of Killeen Texas. We can’t do too much without them. A lot of preemption happens, so cities have to get permission from the state to do certain things.”

While the appropriations process grinds through Congress, the possibility of a BIL reauthorization waits in the wings.

“City leaders are doubling down on innovation, technology, and workforce development to grow resilient local economies, but they can’t do it alone,” said NLC CEO and Executive Director Clarence E. Anthony. “As historic federal investments begin to expire, the need for sustained, strong federal-local partnerships are more important than ever.”