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Dan Lawlor: Budget Cuts Devastate Cities

Saturday, September 22, 2012


“Business is bad, it's murderous. But not for me, of course.” - Willy Loman, Death of a Salesman

The roll call impacts hundreds of thousands of Americans: Vallejo (CA), Stockton (CA), and Scranton (PA). Each of these cities is at, near, or recovering from bankruptcy, bad loans, and business closings.

The bubble economy – unleashed in the waning years of Clinton, and amplified under Bush – was the product of many people walking away from stewardship into a world of easy money, with little accountability and oversight. The country became Las Vegas... times were fun (and still are fun) for some people, but the overwhelming majority are hurting.

Vallejo, California, about an hour away from San Francisco, had been a ship building hub for the federal government since the Civil War, with construction located on the city's Mare Island. One of the city's high schools, Jesse Bethel, is named after a prominent black chemist.

James Synder writes, "When Mare Island closed [back in 1996], 25,000 jobs disappeared and $500 million in annual income evaporated from the community. While the local debate and national focus have centered on the police and fire unions and the chunk of the city budget they have absorbed, the larger macroeconomic picture has been obscured: the federal government was Vallejo’s economic dynamo. The city never really recovered...When a community’s economic foundation crumbles, such upward mobility falls with it."

Stockton and San Bernadino, California are more standard tales of hubris. Both cities sought to cash in on the housing boom of the 2000's. According to Harold Meyerson in an LA Times op-ed, Stockton and San Bernadino rank fifth and third for the number of overall foreclosures nationwide. He argues both cities were hubs of swindling bankers passing out sub-prime mortgages and city leaders who saw dollars signs with new developments.

Paula Sheil, a Community College professor and arts supporter, wrote in the New York Times, “Stockton is bankrupt. With nearly 300,000 people, we became, last month, the largest city in America to file for Chapter 9 protection to unburden ourselves of crushing debt. During the real estate bubble, we grew and grew and grew, spending the future’s money. When the bubble burst, Stockton didn’t merely implode, we went supernova.”

Sheil remains hopeful that art can provide an outlet for positive change even in difficult times. Even as city services shutter, she writes, "The bottom line is that we have a chance to make more right in Stockton by remembering — and acknowledging with our votes in the upcoming election — how significant arts and education are to the future of our city."

Stockton's leaders had visions of their city as a regional hub- and spent millions on development projects along their waterfront, pensions, and salaries, while not planning worst-case scenario budget projections or investing in a broad economy. As shiny buildings sit empty and the new city hall building was repossessed, schools face budget cuts, as do libraries, parks, the arts, and public safety. Many Stockton businesses are turning to private security firms due to massive city budget cuts in police.

Scranton, Pennsylvania, the former "Electric City," has gained pop culture notoriety as the setting of "The Office" - a sitcom about the foibles, romances, and banality of American Middle Management. Recently, the real Scranton made headlines for its bold move to drastically reduce all city employees to minimum wage to meet a budget shortfall.

Locally, in Providence, the Taveras Administration deserves much credit for pulling the city back from the brink of bankruptcy, even against budget cuts on the state level. When faced with a “Category 5 Fiscal Hurricane” Providence's budget did not collapse under the stress. Unlike Central Falls, we're not under receivership, we still have an elected government.

The road of fiscal salvation (damnation?) has not been easy - teacher layoffs, school closings, police force reductions, property tax increases, continued decline in funding from the state. The writer Maxine Hong Kingston, born in Stockton (CA), once wrote, “Normal humanity, mean and wrong.”

Locally, the collapse of the state-backed video game company 38 Studios mirrors the poor planning in Stockton. When hopes are pinned on fantasies, reality often disappoints. As Dan McGowan once told me, "Expecting a random video game company to produce the next Halo, is like saying, "Hey, I heard Titanic made a lot of money. Let's make a movie!"

Stockton is a warning of hubris. Vallejo is a story of neglect. Sustainability isn't smoke, mirrors and monuments for the well to do. Sustainability can't be found in one rescue industry. Sustainability happens in a diverse community, with diverse options for success.


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Those municipalities mentioned have one key component that pretty much brought them down. Rhode Island only has its elected democrats to blame for the poor fiscal situation that too many municipalities face. Not like we depended on the Navy, or the auto industry or gaming to help. Democrat catering to the unions is the problem. 38 studios is just a blip on the screen.

Comment #1 by David Beagle on 2012 09 22

Stockton's leaders describe their fiscal woes as the result of poor financial decisions by prior administrations, which saddled the city with debt and heavy pension costs and unfunded health care liabilities, and the effects of the recession, which has left the city with nearly 20 percent unemployment and a battered housing market.

The city's poor financial decisions were aided by Wall Street, a leading economist in the region reported in July. In 2006, Lehman Brothers, which collapsed into bankruptcy in 2008, underwrote $125 million in pension obligation bonds, according to the analysis by Jeffrey Michael, a University of the Pacific economist. Revenues from the bond sale were channeled into stock market investments that soon nosedived.

"Wall Street clearly encouraged and was a partner to many of the city's risky bets," Michael wrote on his blog.

i am sure wall street jammed this down their throat right????they forced the city to buy pension bonds right?

ps. it took me 30 seconds to find the above info, --your ommission must have been intentional

Comment #2 by jon paycheck on 2012 09 22

As cities are being cut back on state and federal support those same cities have not reacted by cutting expenses at the same proportion. Bad management, this is the time to cut out waste and duplication in costs. Just the way the private sector survives.

Comment #3 by Gary Arnold on 2012 09 25

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