All across America local governments have become dependent on state and federal transfer funds to pay for things that used to be covered by local revenue. Those external funding sources are becoming increasingly unreliable. At a certain point locals are going to need to pay their own bills again – one way or another.
I’ll tap the wisdom of The City Smiths out of Rockford, Illinois who describe the challenge of maintaining Rockford’s infrastructure. The city has a plan to replace all its water mains. Rockford has 850 miles of water pipes. It costs between $1.5 – $2.5 million dollars per mile to dig up and replace those pipes. The current city budget has allocated enough money for three or four miles of water main to be replaced per year. Stop. Think. 850 divided by 4 is 212 years.
In reality the city is actually only replacing a single mile of pipe per year since most of the budget gets redirected to whack-a-mole style emergency repairs instead. So in practice the city of Rockford will get around to replacing all its pipes in 850 years. The life expectancy of these pipes is 70 years – and many pipes are already that old, or close to it. Rockford isn’t some unique basket case. Rockford is absolutely typical of almost every town in the nation.
User fees, sales taxes, and property taxes could double or triple or quadruple and it still wouldn’t bring in enough revenue to cover the cost of necessary maintenance for the system. You need to understand that the same numbers are at play with the sewer system, and the road maintenance system, and the municipal pension and health care system. The cost of paying for all this stuff vastly outstrips local revenue by a wide margin. At a certain point triage is going to set in. Some things will be paid for while others will not.
Since World War II Rockford’s population has migrated away from downtown towards suburban style development. Like most cities Rockford annexed more and more territory over the years as its piecemeal amorphous boundaries attest. Most voters are deeply invested in the suburban environment and have no use for downtown. Political pressure will continue to prioritize maintaining the cul-de-sacs and strip malls at the expense of downtown. That’s simply a fact. And that reality isn’t likely to change any time soon.
It’s also a fact that the suburban development pattern has a massive amount of very expensive elongated public infrastructure compared to relatively skimpy taxable value. This is a monumental municipal money suck with no end in sight.
If you think commercial property and sales taxes will pay ever higher rates to plug the growing gap you don’t know chain retailers or manufacturers very well. They actually work the system to pay as little tax as possible while squeezing subsidies out of pro-business local governments and economic development programs. They’ll pick up and move in a heartbeat and leave behind a trail of empty concrete boxes on the side of the road.
Here’s what the historic downtown looks like. From a municipal accounting standpoint there’s a small amount of public infrastructure serving a good deal of private taxable property. This is a financially stable arrangement.
Now I want to step just outside the city limits to some of the properties in the nearby unincorporated county. This farm has its own private well and septic system. This form of land use requires almost no public infrastructure at all. It may rely on the adjacent county road, but if the county ran into serious financial difficulties and let this road revert to gravel the farm would continue on more or less unfazed (with a bit of pissing and moaning, of course.) A rural land use pattern is very cost effective. Taxes are low and so are government obligations.
The homes in this nearby residential subdivision also have private wells and septic systems. While the expectations of these homeowners are as high as people who live in the suburbs within the city limits, they could eventually make the adjustment to less infrastructure if their taxes remained low. When public funds dry up there will be no real choice in the matter.
That brings us to teachers and other public employees. The overwhelming perception is that local taxes are already way too high. If anyone suggests that there isn’t enough money in the budget to meet expectations the obvious culprits are always identified as, “waste, fraud, inefficiency, corruption, labor unions” and so on. These are the voters who drive the political process.
People tend not to know that most new government hires don’t receive the same salaries and benefits packages as previous generations. And very few of the people about to retire fully grasp that they won’t be receiving the full package they were promised thirty years ago. The numbers are very clear. The money just isn’t there. There will be more cuts, more downward negotiations, and fewer municipal workers of all kinds. And still there won’t be enough money to do all the things that the public currently expects. What we all need to prepare for is… less.