The Planner's Paycheck: Where the Money Comes From

In the United States, most planning occurs at the local level. New homes, street improvements, or community parks don't happen without the hard work of professional planners. By design, much of this work is upstream from ground-breaking and ribbon-cutting ceremonies, meaning it's out of sight and out of mind for all but the most plugged-in members of the community. Being an unsung hero may be fine for boom times, but it can put planning positions at risk during periods of political turmoil and economic uncertainty.

Today, federal policy shifts are threatening core planning-related programs, pandemic recovery funding is ending, and the specter of an economic recession is looming larger. All signs point to future fiscal upheavals for local governments. It's time for planners to take a close look at the sources of funding that pay for their positions — and for the planning profession to start reckoning with what may be a dramatic and protracted period of realignment and redefinition.

To shed more light on this predicament, APA is publishing a three-part blog series on "The Planner's Paycheck." Here in Part 1, we'll explore how we pay for planning now and review some of the warning signs we've already seen through the first half of 2025. Part 2 will cover three previous shocks to the planning profession, and Part 3 will share preliminary thoughts on where we might go from here.

Core Funding Sources

While the specific mix varies considerably among jurisdictions, five broad revenue buckets have long been the linchpins of funding for planning work: intergovernmental transfers, property taxes, other local-option taxes and user fees, regulatory fees, and development exactions and special assessments.

Intergovernmental Transfers

Intergovernmental transfers include formula funding through federal programs like Community Development Block Grants (CDBG), state-level tax-revenue-sharing programs, and state and federal competitive grant programs. Generally, competitive grants fund project-based planning, where the work has a definite start and end date and the final product is a specific change in the built environment, a planning document, or the framework for a new program. In contrast, formula funding and revenue sharing typically pay for ongoing program administration.

Property Taxes

Property taxes include local taxes on real property (e.g., homes, shopping centers, and factories) and state taxes on personal property (e.g., boats, recreational vehicles, and solar equipment). Local property taxes have traditionally been the single most important source of funding for local government operations, including planning work. However, since the late 1970s, most states have imposed some form of limit on the rates local jurisdictions can levy or on the value of property subject to taxation.

Other Local-Option Taxes and User Fees

To close budget gaps, local governments are increasingly dependent on local-option taxes and user fees. These include local sales taxes on goods or services, income taxes on workers or employers, excise taxes on producers or distributors of specific commodities, and fees collected for the use of public facilities or services. Because these revenue sources commonly go into the "general fund," they are often a small but important part of the funding mix for ongoing planning program administration.

Regulatory Fees

For many communities, regulatory fees — such as fees associated with development review, permits for short-term rentals, or licenses for cannabis dispensaries — play a significant role in funding planning positions. Because these are fees for planning services rendered, they generally cannot exceed the actual costs of providing those services and are not eligible to fund project-based planning.

Development Exactions and Special Assessments

Finally, some cities, towns, and counties use development exactions, such as impact fees or special property tax assessments, to fund infrastructure or service expansions. While most of these funds go toward building roads, laying pipes, or building public facilities, some communities also use a portion of this money to pay for project-based planning in support of these physical changes.

Warning Signs

Two big issues may signal potential budget troubles ahead for planners. First, dramatic federal policy shifts over the first half of 2025 have led to cancellations or delays in funding for some project-based planning work. Second, on-again, off-again tariffs have fueled concerns about a broader economic downturn that would hurt communities across the country.

Cuts and delays to federal funding are disruptive and potentially devastating for planners working on affected projects, as well as public-sector planners working for regional agencies that typically manage federal and state flow-through funds. Our preliminary analysis of responses to APA's 2025 Salary and Benefits Survey indicates that more than 80 percent of metropolitan or regional agency respondents' positions were at least partially funded by intergovernmental transfers, formula grants, or competitive grants.

In contrast, local planning departments' dependence on local funding sources makes them more susceptible to a faltering economy. More than 60 percent of all survey respondents working for cities, towns, or counties indicated that their positions were at least partially funded by property taxes, while only 12 percent said their positions were at least partially funded by intergovernmental transfers, formula grants, or competitive grants.

But our analysis surfaced a different potential problem for planners. More than a quarter of all public-sector respondents did not know how their position was funded, or at least didn't know all the sources that contributed to their position funding. This may make it very difficult for planners to anticipate the risks to their positions and take proactive steps to shore up funding for planning.

What's Next

So, have we been here before? While the current threats may feel unprecedented — and perhaps they are — the profession has certainly contended with shocks and disruptions before. Despite planning's importance, the reality is that planning departments are just one of many line departments that local elected officials must account for in their annual budgets. In Part 2 of "The Planner's Paycheck," we'll explore three previous disruptive periods that affected funding patterns for local planning work, and we'll examine how these periods set the stage for the funding status quo.

Top image: © Andrey Popov / Dreamstime.com