Where there’s a crisis in a modern American city, blue model failures—in particular, bankrupt pension funds or intractable public unions—are probably lurking not far below the surface. That is certainly the case for the water contamination disaster in Flint, Michigan, which is traceable to the city’s desperate efforts to save money by switching its water source from the City of Detroit’s water system to the Flint River. As the Daily Caller‘s Blake Neff reports, the city made that decision under heavy budgetary pressures, caused, in part, by its untenable public pension system:
Flint’s problem is fundamentally one of money. The city was the birthplace of General Motors and once had a thriving economy based on the auto industry, but those days are long gone and Flint is now known for its deep poverty (40 percent of the population is impoverished), urban blight, and high crime. As a result, Flint’s population has fallen sharply from about 200,000 in the 1960s to under 100,000 today. The economic downturn combined with a drop in population has unsurprisingly severely restricted Flint’s tax revenues.
What hasn’t been restricted much, though, are the pension demands of Flint’s former workers. Flint has about 1,900 government retirees, who outnumber actual city employees three to one. A glance at the city’s financial forecast from spring 2015 shows that, within the city’s general fund, pensions and retiree health care dominate 33 cents of ever dollar spent, with the figure expected to hit 37 percent by 2020.
… Pensions by themselves didn’t cause Flint’s current crisis. But they played a substantial role that should not be ignored, especially by other struggling cities that could find themselves in similar situations in the future.
Does the emergency in Flint point to the politics of the future, in which tapped out blue cities will increasingly be unable to supply the basic needs of their citizens, and be forced to appeal to the federal government for help? As other blue cities face increasingly serious crises of governability, there are reasons to worry that it might.
The Democratic presidential candidates earned applause last night for denouncing Michigan Governor Rick Snyder’s handling of the Flint situation. But have any of them offered a plan for addressing the underlying cost problems plaguing Flint and other Democratic-controlled urban areas? As we’ve written before, the federal government will likely need to get involved, at some point, with the deepening budgetary disasters plaguing these cities. But this involvement must be guided by the concept of relief-for-reform, in which the bankrupt cities get limited assistance in exchange for real changes to the policies that led to this mess. Those policies include, but aren’t limited to, high wages and pension promises (usually underfunded) for unionized public employees, zoning restrictions, enterprise-killing regulations, unrealistically high levels of tax combined with “exemptions” and carve-outs for crony capitalist special interests, and an overstuffed bureaucracy to give jobs to the politically well-connected.The Democrats are comfortable talking about more money for American cities, but not so much about that whole reform idea—at least, not yet.
One thing a smart think tank might want to do while this crisis brews: develop a set of model policies and reforms that could be used as a starting point to work with burnt-out blue cities. We may be headed toward the biggest crisis in American local government since the race riots of the 1960s; it’s time to think about what comes next.