Monday, July 16, 2012

Bankruptcy choices highlight fiscal pain of cities nationwide -

Bankruptcy choices highlight fiscal pain of cities nationwide -

"It does not look pretty. It's not going to look pretty over the next three or four years," said Michael Pagano, dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago. "It's a long-term structural problem, and cities need to think of new ways to collect resources to fuel their services, or they are only going to be in worse trouble."

Like hundreds of other cities around the country, Stockton, San Bernardino and Vallejo share a number of fundamental problems that drove their finances into the ground. Blue-collar cities with aging infrastructure, they have relatively poor populations. And they're saddled with ballooning pension and healthcare obligations for civic employees and retirees.

Then came the recession, and with it foreclosures, crashing property values and the disappearance of retailers that were vital to sales-tax revenue. Cities that had been scraping by suddenly found their bank accounts depleted and their budgets in a death spiral.
My colleague Mike Pagano has it right.  Cities that have already tried every trick they know, including using CIDs, are becoming insolvent. Finding new sources of revenue will not be an easy task.

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