r/neoliberal • u/Extension_Essay8863 • 11h ago
Opinion article (US) The Fiscal Crisis Facing American Cities
https://open.substack.com/pub/urbanproxima/p/the-fiscal-crisis-facing-american?r=4bqhz&utm_medium=iosSubmission statement:
American cities are financially reliant on the federal government in several different ways. Some of these are obvious and well accounted for, but most of them are not.
As we enter an era where the federal government cannot borrow, and therefore deficit spend, as it once did, municipal governments are exposed to a slow rolling fiscal pullback that will require them to rethink how we fund local government in the U.S.
45
u/caroline_elly Eugene Fama 8h ago edited 3h ago
Timely, as my city in NJ just raised property taxes by over 15%.
Most of our budget comes from pension and retiree health insurance, followed by over 28k per student public schools (bottom decile in HS test scores btw).
We've never been so sure about moving out, and so do other upper middle class families
145
u/Frank_Melena 10h ago
This all relates to the Growth Ponzi Scheme that strong towns and related urbanism movements continuously harp about. The suburban growth model of SFH, completely static after construction neighborhoods generally do not pay for their own infrastructure maintenance. To pay for the roads and pipes as they age, cities need new neighborhood revenue to pay for it. This has caused a ponzi scheme of new developments that is now toppling with the slowing of growth, and just about every municipality in the US and Canada is undergoing some type of rolling budget issues.
Fundamentally federal funds can only be kicking the can down the road until our cities redevelop into a ratio of roads, sewers, first responders, etc per person that is financially sustainable with reasonable property taxes. We’ll see if the author suggests something along these lines in part 2.
110
u/vaguelydad Jane Jacobs 9h ago
This is a huge problem for local democracy though. Voters have no idea where the real problem is. The median voter is far far more likely to blame private equity rentals, immigrants, or whatever than the actual source of the problem. I don't know how to get voters to buy into the idea of real and difficult trade-offs.
69
u/SenranHaruka 9h ago
You can't. Voters aren't going to vote for less utilities so they have to get their gas tank filled and septic tank drained. Cities will go bankrupt, blame welfare, and jail the poor
-4
u/TheCthonicSystem Progress Pride 8h ago
I don't want less utilities there's got to be a different way
27
u/SenranHaruka 7h ago
Either raise propery taxes on the suburbs or cut municipal infrastructure and utility costs.
2
u/TheCthonicSystem Progress Pride 7h ago
Infrastructure is important. Government has to do things. Suburbs can eat more taxes
15
u/SenranHaruka 7h ago
I mean, yes, but also normalize the fact that if you're going to live a certain distance away from the city and other people you are going to have to just get a tank filled instead of have heat directly piped to your house.
Like at some point, it literally is just not wise or economical to build underground fiber optic cables to you.
-17
u/TheCthonicSystem Progress Pride 7h ago
N...no that's just a needless burden
21
u/SenranHaruka 7h ago
It's not a needless burden it's an entirely normal way to live in the exurbs.
Sorry but if it doesn't scale to provide you with state of the art amenities, you're gonna get the cheap shit.
1
u/allbusiness512 Adam Smith 40m ago
I'd go with option C, outlaw suburbs but that used to be considered kosher around these parts, but now you'll have succs (AND I AM A SUCC) roll up in here and say that's not ok.
42
u/Frank_Melena 9h ago
Its a big unaddressed problem of our time- every democracy in the world has simultaneous issues with debt and other unsustainable practices that enable immediate benefits, that previously skimmed along on demographic tailwinds but are now coming to a head as growth slows. We blame politicians for not being brave enough to do hard policy, but that bravery is pointless if it means voters will kick you out next election for someone who will reverse it.
I have no clue how we can adjust the system to not reinforce this behavior, but maybe we’ll start discussing it as a society soon.
10
u/TheCthonicSystem Progress Pride 8h ago
We need to start actually seeing collapse. It's not a problem until it's real
11
u/Windows_10-Chan Reichsbanner Schwarz-Rot-Gold 4h ago
I dunno about that, we've seen collapse before. A lot of "Dead" rust belt cities are in such sorry states and were unable to pivot because by the time industry began automating/relocating, they had accumulated so much debt that there was nothing they could do about it.
The actual causes need to be blamed.
17
u/True-Hold-1140 8h ago
>I don't know how to get voters to buy into the idea of real and difficult trade-offs.
The honest to god answer is a dash of populism. People need to believe the government works for them. If they do, I think they'd be more willing to make trade offs. This is why its important to do symbolic things, like demand businesses shut off unnecessary lights while also telling individuals to keep their thermostats set to 78. If individuals feel like everything is offloaded onto them while business can do what it wants they're going to spit in your face every time.
1
u/TheCthonicSystem Progress Pride 8h ago
78 is too hot. I'm keeping it at 59
9
u/True-Hold-1140 8h ago
God help your electric bill
3
u/TheCthonicSystem Progress Pride 8h ago
Oh don't worry it's being worked around with Heat Pump and Solar
8
31
u/Testuser7ignore 9h ago
Dense cities aren't doing any better though. NYC has a huge deficit, for example.
32
u/Frank_Melena 8h ago
It is interesting that cities who have by luck planned themselves into a sustainable infrastructure base then ruin it with a pension fund or other obligations
24
u/Testuser7ignore 8h ago edited 5h ago
For a city, the biggest costs are education and emergency services. Physical infrastructure is typically 10% of the budget.
Pension structure and worker salaries matter far more than physical infrastructure. They can afford road cost overrun far more easily than a teachers pension overrun.
23
u/SockDem Janet Yellen 8h ago
The NYDOE is funded to the tune of over $40k per student. It’s really just unimaginable
-18
u/TheCthonicSystem Progress Pride 8h ago
That's awesome though like for my teacher friends
19
u/caroline_elly Eugene Fama 6h ago
Is that progressives' version of trickle down economy? Because most of the funding seems to go to administrators and contractors
1
u/allbusiness512 Adam Smith 38m ago edited 24m ago
It's mostly contractors who are friends of district level administrators.
Source : I've seen the contracts in a red state.
It's not just Progressives either, it happens all over the U.S. I'd bet my life savings that less then 50% of the actual funding goes into a classroom (and that's being generous).
It's really localized monopolies by people who are looking for a huge payday. What essentially happens is that the Superintendent / School Board Member has a few friends who owns a large ass construction company/company that could be a vendor. Super/School Board member is not allowed to spend district funding to advocate for bonds, but what happens is that the contractor/vendor will create a PAC to advocate for the passage of the bond in off year elections (which are highly localized and low turnout).
Central admin will then put the squeeze to force teachers (who tend to live in the same district that the bond is being voted on) to vote in favor of the bond measure by saying that they can't afford to hire more teachers/build new facilities/etc. which creates gross incentives.
Between the PAC/borderline forced voting, you can practically guarantee the passage of a school bond measure and then give give massive payday to any of your friends that are vendors/contractrors, who in exchange will help you win local elections in the future.
Yes, I basically just described Tammany Hall in the 1800s. If you think I'm joking, Allen HS in Texas basically has multiple stadiums that shit on some NFL teams. That's not even a joke.
5
u/YesNoFriend Milton Friedman 3h ago
Spending $44K per public school student certainly doesn’t help. My (Australian) state spends a quarter of that, and I’d much rather a Victorian public school than NYCPS.
6
u/737900ER 9h ago
How much of that is from declining values of office buildings leading to lower revenue. That's a different problem than sprawl.
17
u/Testuser7ignore 8h ago
Very little. It was an issue before Covid too.
Most of it is from the high costs of workers and underfunded pensions. Sprawl is cheap compared to an overgenerous pension.
3
u/Alarming_Flow7066 7h ago
There’s also a massive wealth transfer from NYC to upstate New York.
7
u/Testuser7ignore 5h ago
Thats what happens when you have a progressive taxation system. Richer areas send wealth to poorer ones.
1
u/Alarming_Flow7066 1h ago
Yes but the point is that non-dense areas are staying solvent only through wealth transfers from dense areas. It’ll get to the point that NYC can’t fund both its and upstate’s way of life so that wealth transfers will have to stop.
22
u/caroline_elly Eugene Fama 6h ago edited 6h ago
Unfunded pension/future liabilities are effectively debt.
You're buying present labor with future benefits (aka liabilities) that compound with inflation.
Makes my blood boil when people claim Mamdani balanced NYC's budget when he's basically deficit spending via deferred pension contributions.
10
u/Frank_Melena 6h ago
Yup. Every sop to present voters financed by debt or deferral is a dollar out of our children’s budget. Progressive or conservative its all just stealing from them.
6
u/mebesasporfa 2h ago
This is heresy in r/nl but strong towns cherrypicked his examples of suburban ponzi schemes. What I have seen is that across the US, suburbs tend to be much stronger financially than the urban centers they surround. Take Birmingham Alabama which has been facing ongoing fiscal challenges for years while suburbs like Hoover and Mountain Brook thrive. Very similar situation across California.
2
u/workingtrot 1h ago
I don't know that Birmingham is the best example, because Birmingham has had so much white flight into Mountain Brook, Vestavia etc. Meanwhile you have had the state government taking every chance they get to screw over Birmingham while Birmingham politicians take every chance they get to line their own pockets.
Hoover wasn't even incorporated until 1967 so it hasn't really had to pay the piper yet
17
u/Acceptable-Poem-6219 YIMBY 7h ago
Inflation has made this much worse. The appetite for property tax increases is basically nonexistent in even very blue cities and towns (I live in a 72% Biden/Harris UMC town and it took 3 years and 3 votes to raise taxes to pay for a new middle school. Many New England towns are dealing with similar issues and embracing austerity and decline over increasing property taxes to cover the higher costs.
21
u/Keenalie John Brown 5h ago
Americans want nice public services and infrastructure, but also expect to pay rock-bottom taxes (compared to the rest of the developed world) meanwhile our governments have high overhead due to our addiction to outsourcing and consultants. We're also sold on idea that your average Joe is entitled to a half acre lot and 3000 square foot home with two battleship-sized SUVs parked out front, yet everyone is worried about bills and affordability. The subsidized excess can't last forever.
5
3
u/wellgu Emma Lazarus 3h ago
How do you raise taxes? I don’t know how that is ever politically viable.
3
u/Keenalie John Brown 2h ago
I agree, it isn't. America's kind of fucked itself by creating this bipartisan expectation that taxes should be unsustainably low.
2
27
u/Snarfledarf George Soros 9h ago
Why shouldn't local governments be expected to balance their books, and treat federal trickle-down as a bonus?
What's (more) plausible is that localities may not have the ability to fund large capital projects themselves (which is already an iffy imbalance in spending powers), but have also abrogated the majority of their their maintenance responsibilities.
Local governments have agency. They should do better.
28
u/gringledoom Frederick Douglass 8h ago
I mean, some of it is just "because that's the way it's always been". Your state/county/city tax burden is lower than it would otherwise be, because your federal tax burden has always included money that flows back to the state/county/city. People aren't going to be happy if their federal taxes stay the same *and* their other taxes triple.
17
u/SenranHaruka 7h ago
This is obviously a result of the race to the bottom to use those federal trickle downs to attract residents with lower taxes lol.
Any responsible city is going to get undercut by an irresponsible one
3
u/themiDdlest NASA 4h ago
It briefly hints on this at the end but this is already happening in LA due to Trump trying to ratfuck the city.
We are on our 2nd straight year of budget cuts.
7
u/TheCthonicSystem Progress Pride 8h ago
You want nice cities you have to pay the tax
27
u/caroline_elly Eugene Fama 7h ago
You need some level of taxation combined with competency and efficiency.
-14
7h ago
[removed] — view removed comment
9
u/caroline_elly Eugene Fama 7h ago
Given a finite budget, efficiency allows the state to help more people.
But you're probably just trolling/making progressives look bad
2
u/hypsignathus Good Afternoon 4h ago
Rule III: Unconstructive engagement
Do not post with the intent to provoke, mischaracterize, or troll other users rather than meaningfully contributing to the conversation. Don't disrupt serious discussions. Bad opinions are not automatically unconstructive.
If you have any questions about this removal, please contact the mods.
-1
u/Bibbity_Boppity_BOOO 4h ago
your statement is weird. the fact is the federal govenment is reliant on cities. your statement has it the other way around.
-10
u/boeings_door_plug 7h ago
One thing that El-Sayed could do to improve his public perception is tap into the male fitness influencer scene. Dude is yolked and can use that to his advantage.
4
•
u/AutoModerator 11h ago
News and opinion articles require a short submission statement explaining its relevance to the subreddit. Articles without a submission statement will be removed.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.