Cities across the country entered the FY 2025 budget cycle facing mounting infrastructure demands amid increasingly constrained fiscal conditions. As aging assets require more frequent maintenance and replacement, local governments are balancing the need to invest in core infrastructure such as roads, water systems and public facilities against rising costs and competing budget priorities.
City Fiscal Conditions 2025 survey data from cities revealed that infrastructure needs have continued to rise from FY 2024 to FY 2025, with these growing demands placing strain on municipal budgets. While infrastructure spending has largely been maintained, particularly in smaller communities, the data underscores the financial pressure cities face as they work to sustain essential services and long-term capital investments.
Rising Infrastructure Needs Are Closely Linked to Budgetary Strain
Among cities reporting increased infrastructure needs in the 2025 survey, an overwhelming majority — 90 percent (125 out of 132 cities) — also report a negative budgetary impact, underscoring how growing demand for capital investment is straining local finances. By contrast, no cities experiencing decreased infrastructure needs reported either positive or negative impacts on their budget, reflecting the rarity of declining demand in the current fiscal environment. The CFC survey data emphasized that rising infrastructure needs were not only widespread but also closely associated with fiscal stress for cities heading into FY 2025.
National League of Cities
By Harshita Umesh Tanksali
April 20, 2026