However Americans feel about the federal government, they are generally happy with their local governments. Last month, a CNN poll quantified this disparity: 26 percent of people trust the feds all or most of the time, about a third feel that way about their states, and 52 percent trust their localities.
On May 20, 2006, Ibrahim Gambari, the gregarious UN under-secretary general for political affairs, met with leaders of Burma’s military junta and their most famous political prisoner, Nobel Peace Prize winner Aung San Suu Kyi. It was Gambari’s first trip to Burma, and the first time in two years that the country’s secretive rulers had granted a UN official such high-level access. Gambari’s optimism was palpable: “They want to open up another chapter of relationship with the international community,” the seasoned Nigerian diplomat said in a press conference on May 24. But three days later, only a week after meeting with Gambari, the junta extended Suu Kyi’s house arrest by a year. Suddenly, Gambari’s optimism was his humiliation. “People thought he had fallen for their line,” says Mark Farmaner, director of Campaign for Burma UK. “He was completely suckered.”
So it sounds like the president may call for some sort of additional aid to state and local governments Tuesday when he speaks on job preservation and creation at Brookings. That’s potentially very good, but it’s important that Congress and the administration get the job done right this time. One suggestion is that those working on the problem go back to the future this week and give general Nixon-style revenue sharing a chance. It could be that some of that old-time Rx from the Nixon era is really and truly the best way to hold off the ugly coming round of local government service cuts and layoffs forecasted in a recent Brookings/National League of Cities paper.
The question this week, after all, is how to ensure that more of the next round of federal aid winds up where it is most needed at the moment, which is at the local tier of the too often conflated category “state and local government.”
The problem, in this respect, is that the last tranche of assistance, which flowed mainly through the State Fiscal Stabilization Fund (SFSF) within last winter’s $787 billion stimulus package, did not really get to local governments.
Vice President Biden’s chief economic advisor Jared Bernstein seemed loathe to make headlines during a forum the Metro Program staged last week in Washington with the National League of Cities (NLC) on the nation’s deepening local government fiscal crisis. Instead, he stuck close to his text, raised smart academic questions about possible courses of action, and emphasized he was not expressing any official administration preferences about how to proceed.
And yet for all that, Bernstein committed news. Most notably, in a sign of gathering momentum for additional economic stimulus, he expressed a surprising openness to more direct federal forays into job creation as unemployment continues to rise.
First, Bernstein seemed to entertain the possibility of some sort of special fiscal relief for cities and other municipalities, acknowledging the possibility raised in a framing paper produced for the Brookings-NLC event that local government service cuts and layoffs could well impose a significant drag on the nation’s economic recovery just as the extraordinary interventions of the $787 billion American Recovery and Reinvestment Act of 2009 (ARRA) trail off. Said Bernstein: “We’ve got to do more to translate economic growth and continue helping states and localities meet the deep fiscal challenges they face so as to [help them] avoid taking steps that make getting out of this mess that much harder.”
Mayor Michael Nutter of Philadelphia made a comment that prompted nervous laughter early in a forum the Metro Program held with the National League of Cities (NLC) yesterday on the looming local government fiscal crisis. Deadpan, he said: “Hearing a presentation that the recession is over reminds me of a sign I saw one time a couple years ago that said, ‘Mission Accomplished.’”
The man has a point. That GDP does not equal jobs is well understood. Less clear, and worth keeping in mind as some key indicators start turning around, is that the recovery is going to come only over time in three stages. First, GDP and labor productivity will rebound as they are now. Then firms will hopefully start hiring again. And eventually, once the labor market tightens and depending on what sort of jobs the ‘next economy’ creates, wages will start rising too.
The conundrum is this: The U.S. economy is just entering stage one, and progress towards stages two and three is hardly guaranteed. Indeed the situation is still getting worse in parts of the economy. The Mortgage Bankers Association issued a press release yesterday announcing that this quarter’s home loan delinquency rates reached another record high. Percent increases in GDP don’t pay mortgages, quipped their senior economist, wages do. And with the number of unemployed still rising, fewer people receiving a paycheck will equal fewer people making mortgage payments on-time, simple as that.
State government budget problems have been a well-publicized element of the nation’s ongoing economic crisis. Less remarked upon has been a lower-profile meltdown: the nation’s soon-to-be ugly local government fiscal mess. And now it’s time to tune in.
How do things look? The short answer is: brutal! And that is why four of America’s toughest-minded mayors--Mayors Michael Nutter, Elaine Walker, Scott Smith, and Chuck Reed of Philadelphia, Bowling Green, Ken., Mesa, Ariz., and San Jose respectively--will travel to Washington Thursday (read the joint Brookings/National League of Cities background paper here) and review what they are dealing with prior to remarks to be delivered by Vice President Biden’s chief economic advisor Jared Bernstein.
The mayors’ messages will likely be tart. With nearly nine in 10 city finance officers reporting a declining ability to meet local fiscal needs, city budget officers across America are projecting nearly a 3 percent average budget shortfall in 2009, and much deeper shortfalls in 2010 and 2011. What is more, while there is regional variation, the pressure is building in virtually all corners of the country, shaped by differences in metropolitan economies, state-local tax structure, and service demands. In Philadelphia Mayor Nutter has been hit by rising unemployment which has hurt income tax collections. In Mesa, Mayor Smith has been managing through the fiscal chaos generated by a colossal sales tax crash and maybe the nation’s worst foreclosure mess. And in all quarters things are almost certainly going to get much, much worse. That’s because while income and sales taxes are typically the earliest sources of city revenue to decline as job losses in a community increase and consumer purchases decrease, property tax collections--which make up the bulk of city revenue nationwide--decline much more slowly as real property assessments are adjusted to reflect declining housing values and have only just begun to slump.
Something wonderful, or terrible, is taking place in Philadelphia. The city's sports fans, whose only consistent love has been for an inanimate object--the statue of Rocky--are becoming warm and fuzzy.
Whatever happens in the National League and American League Championship series unfolding over the next week or so, one outcome has already been decided--the effective end of the theories of Moneyball as a viable way to build a playoff-caliber baseball team when you don't have the money. That no doubt sounds like heresy to the millions who embraced Michael Lewis's 2003 book, but all you need to do is keep in mind one number this postseason: 528,620,438.
I have seen baseball's past and it is in Baltimore, at Oriole Park at Camden Yards, the new $105.4 million ballpark where the local nine--the Orioles--are now in residence. Its predecessor, Memorial Stadium, was a nice enough and generally self-effacing spot for a ballgame. Camden Yards, on the other hand, promises to do for baseball stadiums what prewashing did for bluejeans.
I have seen baseball's past and it is in Baltimore, at Oriole Park at Camden Yards, the new $105.4 million ballpark where the local nine--the Orioles--are now in residence. Its predecessor, Memorial Stadium, was a nice enough and generally self-effacing spot for a ballgame. Camden Yards, on the other hand, promises to do for baseball stadiums what prewashing did for bluejeans.
