mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
A Silver Lining in Hard Times

The ‘recovery’ may be entering its third year, but America’s cities are still in recession.

According to the National League of Cities, municipal revenues are set to fall for the sixth straight year in cities across America. On top of the regular pressures of reduced tax revenues from declining property values, overburdened, underfunded public pensions are failing to hit their investment marks and are hammering the bottom line. The Wall Street Journal:

The skyrocketing costs of pensions and health care are also taking a toll on cities. Among the 324 cities surveyed, 77% said pension costs increased in 2012 from the previous year, and 81% said the same of health-care costs.

San Jose, Calif., Mayor Chuck Reed made headlines this year for a huge pension overhaul, approved by voters in June, which requires city workers to contribute significantly more to their pensions or to accept more modest benefits. The measure faces legal challenges from labor groups, but Mr. Reed said it was necessary to avoid deeper cuts to city services, even though the city’s revenue is now on the rise.

If there’s a silver lining in these hard times, it’s this. Though national politics remain gridlocked, the fiscal sword of Damocles is forcing cities to try new ideas and forge new compromises that would have been unthinkable just a short time ago.

Features Icon
© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service