Research Corner: Municipal Cost Index

In CML’s 2026 State of our Cities and Towns report, Budgeting for Tomorrow’s Economy, CML members weighed in on challenges they faced while putting together their municipality’s budget. Of these respondents, 74 percent indicated that economic uncertainty is a moderate or significant challenge. Another 63 percent find expected inflation in the next year to be a significant or moderate challenge. Other challenges facing municipal budgeting can be found below.  

 

Uncertainty and rising costs make budgeting a challenge, especially accompanied by reductions in local revenue and loss of state and federal funding. Providing public services, addressing aging infrastructure, and meeting community expectations are becoming more challenging.  

 

The Municipal Cost Index is a tool that highlights these challenges and can help municipalities plan expenses, vet contracts, and monitor price increases. Municipalities can also use this tool to highlight the need for revenue-raising measures and other difficult decisions government officials are tasked with.