Cash-strapped cities across the country from Harrisburg to Birmingham are turning to bankruptcy as a last resort. As more and more cities consider taking the plunge, we wonder whether bankruptcy will allow new ideas to put the cities back on their feet.In California, encouraging news from Vallejo: As the Washington Post reports, four years after it declared bankruptcy, its finances are stable and considerably better than many of its neighbors, and new techniques provide better services at considerably lower cost. First the city disposed with massive salary and benefits guarantees (80 percent of the city budget was spent on employee compensation). Then, imitating successful programs from other cities around the world, the city began to experiment with ways to reduce the cost of city services through technology and community initiatives:
The police went high-tech, investing $500,000 in cameras across the city that allow officers to monitor a larger area than they could before. The department deputized citizens to participate in law enforcement by sharing tips on Facebook and Twitter.Gomes, whose husband is a retired police officer, focused on public safety. The couple went neighborhood to neighborhood setting up e-mail groups and social media accounts so people can, for instance, share pictures of suspicious vehicles and other information. “There have been countless cases where ordinary people have stopped crimes this way,” Gomes said.The number of neighborhood watch groups jumped from 15 to 350. Citizen volunteers came together monthly to paint over graffiti and do other cleanup work.And the city council struck an unusual deal with residents — if they agreed to a one-penny sales tax increase, projected to generate an additional $9.5 million in revenue, they could vote on how the money would be used. The experiment in participatory budgeting, which began in April, is the first in a North American city.
Cities and towns all over the country should take a close look at these ideas, especially those in dire financial straits. The trick, however, is to do these things before going bankrupt, to provide better government at a lower price. Then you can cut taxes, attract new industry and businesses—and give your residents a better life with more money and lower taxes.It’s simple really, but it involves breaking some blue taboos. Mayors and governors willing to break the taboos can make a difference; over time, new models of state and local governance will appear that do a better job of providing essential services at a much lower cost. It’s called progress, and even if not everybody likes it, it’s a good thing.