True to their wild West roots, Colorado municipalities are finding their own ways to battle the recession.

Nine out of 10 cities in the state are actively engaging in economic development activities.

A report by the Colorado Municipal League showed that economic development included aggressive marketing of their communities, technical assistance to businesses of all sizes, business incubators, site redevelopment, tourism promotion and tax incentives.

Dozens have developed “buy local” campaigns to stimulate their local economy, including the cities of Lamar, Snowmass Village and Durango.

Here are the key findings of the 2010 State of Our Cities & Towns Report.

Ninety-five percent of larger cities and 65 percent of all municipalities believe their financial situation will be worse or much worse during 2010.

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Sales tax is a primary source of revenue for cities and towns, and 59 percent expect a further decrease in sales tax this year.

The top five challenges facing municipalities are a decrease in tax revenue, unfunded street maintenance, adverse local economic conditions, increased employee health costs and unfunded water/wastewater needs.

Reduced revenue has meant budget cuts and service reductions.

Forty-one percent of towns and cities have hiring freezes; 30 percent have reduced staff positions; and regular maintenance of equipment has been deferred in 56 percent of municipalities.

All cities and towns have had service reductions in police, fire, parks, recreation and street maintenance.

And the positive news is that Colorado’s towns and cities are leaders in economic development: 84 percent of large cities and 49 percent of all municipalities dedicate resources toward economic development; 63 percent of large cities are currently engaged in redevelopment projects, with 68 percent offering tax incentives to business; and 56 percent of mid-sized municipalities engage in tourism promotion activities.

To view the full report, visit the Colorado Municipal League’s Web site.