Washington’s Dysfunction Makes Local Officials Feel Pretty Good About Themselves

“We don’t have the luxury of shutting down…we’re still going to pick up your trash.”

National Journal
Nancy Cook
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Nancy Cook
Oct. 10, 2013, 10:42 a.m.

While con­gres­sion­al lead­ers in Wash­ing­ton bick­er over the gov­ern­ment shut­down and the mech­an­ics of rais­ing the debt ceil­ing for just a few weeks, the ma­jor­ity of city gov­ern­ments around the coun­try are sit­ting pretty — or, at least, in much bet­ter fin­an­cial situ­ations than they have been over the past five years. 

It’s a nice change from the lean years fol­low­ing the Great Re­ces­sion, when many cit­ies’ fin­ances were battered by fal­ter­ing loc­al hous­ing mar­kets, re­duced tax bases, aging in­fra­struc­ture, and grow­ing health­care and pen­sion ob­lig­a­tions. Today, 72 per­cent of city fin­ance of­ficers say that their cit­ies will be bet­ter off money-wise in 2013 than in 2012, ac­cord­ing to new re­search from the Na­tion­al League of Cit­ies, an ad­vocacy group that rep­res­ents more than 1,700 cit­ies across the coun­try.

What’s the cause for op­tim­ism? Well, it’s primar­ily based on in­creased rev­en­ue in the form of city in­come and sales taxes. In 2012 alone, city sales taxes rose by 6.2 per­cent, the re­search shows, a level not seen since the start of the re­ces­sion. City in­come taxes in­creased by 4.4 per­cent in 2012 and are pro­jec­ted to grow an­oth­er 2.3 per­cent in 2013.

On top of that, city of­fi­cials began to make tough choices in an ef­fort to bal­ance their budgets, ac­cord­ing to the League of Cit­ies’ data. Thirty-nine per­cent of city fin­an­cial of­ficers raised user fees to pay for city ser­vices; roughly one-quarter of cit­ies re­duced their share of health­care be­ne­fits or pen­sion ob­lig­a­tions for pub­lic em­ploy­ees. These are fin­an­cial choices that the fed­er­al gov­ern­ment is still strug­gling with as it wages yet an­oth­er battle over the fate of long-term spend­ing on Medi­care and So­cial Se­cur­ity, as well as the across-the-board spend­ing cuts known as se­quest­ra­tion.

All of this can make city of­fi­cials from around the coun­try look dis­par­agingly on the fed­er­al gov­ern­ment’s on­go­ing grid­lock. Just ask Ron­ald Green, the con­trol­ler of Hou­s­ton, a city that has got­ten its fisc­al house in or­der thanks to a di­verse loc­al eco­nomy that in­cludes a luc­rat­ive port, loc­al uni­versit­ies, and ma­jor health­care fa­cil­it­ies. “We don’t have the lux­ury of shut­ting down,” Green says. “Even with all of that go­ing on, we’re still go­ing to pick up your trash. You have 911 — someone is still go­ing to re­spond. If you turn on that wa­ter, it’s still go­ing to come on.”

Hou­s­ton has not yet had to make any ma­jor changes due to the on­go­ing gov­ern­ment shut­down, Green says — though in the com­ing weeks it may have to eval­u­ate some grant-fun­ded po­s­i­tions if the shut­down con­tin­ues.

This isn’t to say that cit­ies are in the clear in the long-run. They still face ma­jor hurdles from big-tick­et budget items like pen­sion and health­care costs for mu­ni­cip­al work­ers (see: De­troit, Mich.), not to men­tion in­fra­struc­ture that hasn’t been up­dated in years. But if any­one is point­ing fin­gers about who is be­ing pro­act­ive in tack­ling fin­an­cial quandar­ies and who’s dither­ing, then the city of­fi­cials win over the fed­er­al elec­ted of­fi­cials. After all, at least cit­ies man­age to pass their budgets year-after-year.

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