Cities Can’t Cut Their Way to Prosperity

February 11, 2010 - (3 min read)

“Cities to cut….” will be the prevailing storyline in much of the coverage of city fiscal conditions over the next couple of years.  But, city leaders still have the job of making decisions that position their cities for prosperity in the future according to 50+ local officials who participated in an NLC seminar in late January.  Other conclusions included:

–      5% cuts in any given year may be possible, but most cities are facing more dramatic cuts over the next several years;

–      Old assumptions about city services are being challenged, and city leaders must rethink what cities do and how they do it when making budget decisions; and

–      Choices city leaders make will involve tradeoffs between balancing the budget and quality of life, or the public good.

In short, as Kalamazoo, Michigan Vice Mayor Hannah McKinney noted, “We can’t cut our way to prosperity.”

McKinney led the group in a brainstorming session about what the future of cities must look like.  A word cloud on Cities in the New Normal shows the words and phrases that rose to the forefront of this session.  A clear theme emerged – of cities turning outward to collaborate, partner, and regionalize.  Very few, if any, comments suggested a turning inward, of cities becoming more insular.

The University of Illinois at Chicago’s Mike Pagano drove this theme home with a series of recommendations for city action, including:

–          Pushing state governments to authorize new local revenue authority and reduce tax and spending limits imposed on local governments; and

–          Broadening local tax bases and revisiting pricing structures for city services; and

–          Regionalizing service provision wherever possible.

In other words, cities can’t go it alone.  But, this doesn’t mean that we will see a rash of attempts to consolidate local governments.  Much more likely is that we’ll see concerted efforts to consolidate, or regionalize functions – specific services – of governments. Preference for these types of efforts could be seen in an exercise that the city leaders engaged in that asked them to rank 10 budget-balancing options on budget impact vs. what was best for the community overall.  Consolidation ranked at the top of the budget impact list, but near the bottom of the public good list. A number of local officials noted that people may have reservations about government in general, but they tend to have very strong views about, and ties to, their own local government.