According to the study issued by the National League of Cities, “10 Imperative Issues Facing Cities in 2014,” fiscal instability tops the list. While the period of 2008-2013 witnessed the worst recession since the Great Depression in the United States, municipal research data and analysis shows that this impact is not the primary reason for the current crisis. The single issue for identifying the root cause of cities’ deteriorating stability: poor fiscal management.
Some of the most common examples include: carryover debt, high pensions, and constraints on adjusting benefits for employees. For decades, local governments have continued to spend irrationally rather than budget and plan responsibly. The recent recession didn’t create, but exposed a cancer that had been growing for years.
When the business management of local government becomes burdened by poor fiscal decisions, it creates a domino effect gradually deteriorating the vitality and economic strength of the community.
Without a sound budget … local government loses the ability to provide basic needs for the community such as improving efficiency through technology, improving deteriorating roads, enhancing public safety, attracting new businesses and strengthening schools. Additionally, public amenities such as parks and common areas are abandoned.
Without a well-maintained community … businesses begin to relocate creating a loss of critical commercial tax dollars – a vital source of operating revenue which leads to vacant properties and loss of jobs.
Without a strong economic environment … citizens face unemployment which leads to residential relocations and foreclosures, increase in crime, loss of local investment towards retail businesses and the ability to afford higher education.
Without vital citizen engagement … cities lose their primary partners in providing services through the collapse of nonprofit organizations that supply assistance to those in need, create events for connectivity and volunteer for municipal improvement activities.
In an effort to resolve the mistakes of the past, many proactive cities are turning to their citizens for help. The solution resides in a three-part model of community participation: non-profit organizations are supporting and maintaining social services, businesses are partnering with governments on local improvements and citizens are invited to participate in discussions and actions towards improving services.
As a way to reduce staff and equipment costs, cities are outsourcing services they once provided allowing private industry to not only manage more efficiently, but also profit from the contract (privatization). Additionally, municipalities have become open to sharing services with other local governments as a way to manage a better rate of return (partnerships).
Strong fiscal management is no longer a choice for local government leadership, but a critical need. The financial burden of government starts with trickle down taxation as a solution: the federal government imposes taxes on states, then states compensate by imposing taxes on cities whose only option is to evaluate the way they operate rather than increase taxes on citizens.
Improving services by streamlining processes, exploring ways to conduct business more efficiently and rethinking how to cover the cost is at the heart of reinventing local government for the future.
Cities need to humble themselves by admitting defeat to the old ways of operating and embrace the opportunity of innovative change for the future.
“The voyage of discovery is not in seeking new landscapes but in having new eyes” (Proust)
Better. Faster. Cheaper.