Prudence comes from a municipality depressed by decline (8)
I believe the answer is:
sagacity
'prudence' is the definition.
(thesaurus)
'a municipality depressed by decline' is the wordplay.
'municipality' becomes 'city' (city is a kind of municipality).
'depressed by' says to put letters next to each other (in a down clue, some letters go below others).
'decline' becomes 'sag' (I've seen this before).
'a'+'city'='acity'
'acity' put after 'sag' is 'SAGACITY'.
'comes from' acts as a link.
(Other definitions for sagacity that I've seen before include "Good judgement, wisdom or shrewdness" , "showing wisdom" , "A gas city for wisdom and know-how" , "It's a cagy kind of wisdom" , "good judgment?" .)