I've long been a lover of cities. Cities both small and large are on the front lines of our civilization. But I fear that too many cities have leveraged their futures on growth that will never emerge. Moreover, I continue to be amazed at the number of cities that are proceeding with a "business as usual" model into the new economy.
Some have made cuts to basic expenses, others have eliminated unfilled positions, and a few others have laid people off. But there are few reports about cities, large or small, that have taken this opportunity to rethink the way that they do business and provide services. Mostly, it seems to be a "wait until things return to normal." But will they and should they?
What concerns me the most and has since the days that I was a public servant, is the level of indebtedness that local governments, seem to be falling into. From land purchases, to park construction, to police car purchases, everything seems to be debt financed. Perhaps there is an acceptable use of debt for local governments, but I am starting to believe that many communities are leveraging their future fiscal condition in ways that are more risky that previously thought. To pay for improvements needed by growth that has already occurred with revenues for growth that demographically and economically will be different is worth discussing.
Yes, yes. Each community is different. But collectively things aren't changing much. Much of the ARRA federal stimulus money is flowing to local governments in the form of low interest loans rather than direct grants. And many police departments are growing with the help of COPS grants from the federal government that pay for new officers over a three year period. I consider these grants as debts because they delay costs to future. After the three year period, many local governments that I have worked with are finding that the next Council is waking up and realizing that they have a very large bill to pay for all of these previously grant-funded officers in year 4 and beyond.
Scott Dadson, the City Manager for Beaufort, SC is taking this time to radically rethink how his city provides essential services to its community. Scott calls it "Creative Deconstruction." Over the past year he has worked with his Council to reposition his city as a leaner operation that manages its cash well and provides truly efficient local services. I have been privileged to work with Scott over the past on updating their Comprehensive Plan (visionbeaufort.blogspot.com). The resulting plan is a document that merges the very best in sustainable development practices with fiscal policy and service delivery. More than any plan that I have been seen or worked on, this effort is yielding a truly comprehensive approach to growing and maintaining a community over the next 100 years (Beaufort is nearing its 300th birthday). But how may other Scott Dadsons are out there right now?
Ever since Stephen Goldsmith, the former Mayor of Indianapolis, published his book "Reinventing Government" more than twenty years ago, I have been fascinated with how organizations can change and why they don't change. Will 2009 mark the next sea change in local government?
I'd like to spend some time exploring this issue of debt and operational efficiency in future posts. More importantly, I'd love to get some feedback on what others think. Is debt an essential ingredient to local government success or is there another way? And are the ways in which we have delivered services in the past 10-20 years the best ways or should we be using this economic correction to adapt and change to the new economy? Post a response or email me. I think that we owe it to the future generation to leave them with a better world. And a better world starts with better cities.
Happy Labor Day
11 years ago
Cities, like families, have to live within their means. But to construct a budget, cities, again like families, need to do two things: They have to be realistic about revenues, and they have to establish priorities for spending.
ReplyDeleteAfflicted by the delusional strain of democracy we're currently practicing in the U.S., neither families nor governments have proven all that adept at getting real about where the money is coming from and where to spend it to build and sustain healthy lives.
On the revenue front, local governments get lousy but self-serving advice about economic development. They hire consultants who -- surprise, surprise -- tell them they're perfectly positioned to reap the rewards of the Next Big Trend, whether it's the "creative economy" or nanotechnology. All they have to do to seal the deal is pay for more consulting work. Many -- maybe most -- local governments don't have a clue where growth is coming from and how to spread its benefits throughout a community.
Also under the revenue category, elected officials have fallen under the bipartisan delusion that the money to fund citizen wishlists comes from some other source than taxes. In the last 40 years, government has become the only category of organization assumed to be more effective when its access to revenue is restricted. Republicans, beginning in the 1970s, honed the argument that taxes are takings. But the Clintonian Democrats bought into the argument to the extent that any reasonable suggestion that we need to tax ourselves in proportion to what we demand from government is off the table.
From a budget-shaping standpoint, that means we've excluded revenue growth from our lists of options -- which, in the context of business planning or family budgeting, would seem perverse.
The situation gets a little crazier when you couple the reluctance to raise revenue with a refusal to target spending to prioritized needs. Just about any list of issues affecting long term community sustainability would include: Rising costs of health care (especially costs related to addressing preventable chronic conditions like diabetes), oil dependency and its implications for an auto-dependent society, climate change, rapidly shifting demography due to the aging of the Boomers and imigration, and the growing gap between rich and poor. Yet just about any list of spending priorities for government at any level vastly underfunds programs addressing those needs and diverts what are likely to be diminishing revenues to subsidizing a status quo of coal and oil-dependent energy systems, auto-dependent suburban sprawl, and tax and finance policies that reward the wealthier tiers of American society for bucking change.
So while debt management is a practice we should all encourage at the family or government level, focusing on debt issues is a question-begging distraction when our approach to fiscal policy features a determination to depress revenues and a refusal to prioritize spending.
Ben Brown