The Shrinking Services Problem

ericscorsoneBy Eric Scorsone

Legacy cities often face the difficult task of providing critical public services like police and fire protection and code enforcement, just when their tax base and fiscal capacity are shrinking. These very problems are occurring just as state and federal governments are reducing their support to city governments to balance their own budgets. Higher tax rates often become necessary just to try and maintain revenue streams. Cuts to public services, which are often an important element in attracting and maintaining population, are also implemented.

Witness the city of Saginaw, MI where a shrinking tax base and falling state support has led to the police force being the same size as it was in 1900. Saginaw also faces a huge underfunded liability related to retiree health care that will force further cuts or higher taxes in the future. Public services were over-consumed in the past and the city did not set aside enough funds for pensions and health care.… Read More

Legacy City States More Prone to Overspend

ChrisProfileBy Chris Eshleman

In late January, the US Census Bureau compiled and released data showing that in 2012 state governments spent well beyond their means — for the third time in four years. Revenues lagged behind expenditures in 34 states.

The implications of state deficits for city-level fiscal health are myriad. They cover everything from the future of revenue-sharing programs and borrowing rates to state legislatures’ ability to compile healthy annual capital budgets.

But when you break the numbers down, the implications were worse for some states than for others. The 20 states with at least one legacy city overspent in 2012 by $391 per state resident — that’s the amount that state expenditures eclipsed revenues divided by the number of state residents (as counted in the 2010 census).… Read More