The Atlantic Cities: America's Biggest City Governments Are Still Struggling to Recover From the Recession
The nation and indeed the world have been following the ongoing fiscal catastrophe in Detroit, the largest municipal government in history to file for bankruptcy protection. But while Detroit’s financial woes are outsized, they're far from unique. The problem of declining revenues and increasing costs, compounded by the effects of the Great Recession, has been a troubling trend for local governments for years now.
In many, if not most, of America’s major cities, the revenue that the government needs to operate – to pick up trash, police the streets, pay its workers’ pensions – remains far from what it was before the economic crisis.
An important new report from The Pew Charitable Trusts' American Cities Project paints a grim picture of the financial health of the center cities of America's 30 largest metro regions, municipalities that house one in 10 Americans and that account for nearly half of the country’s economic output.
In 29 of the 30 cities studied – each one that was able to do so legally – local governments tapped into reserve funds as a first step before resorting to spending cuts. Average reserve levels fell from 18 percent of the general fund revenue in 2007 to 14 percent in 2011, a decline that means that these rainy-day funds could be in danger of drying up. Kil Huh, the director of state and local fiscal health at Pew, says that reliance on reserve funds is a dangerous bet. “I don’t think anyone really foresaw how bad or deep the economic recession would be,” Huh explains. “Most cities’ reserve funds didn’t really have the appropriate levels to weather all the shortfalls they saw."
Read the full article at theatlanticcities.com.
- American Cities Project