America's Municipal Meltdown: It's Tough Times for Troubled Towns

By Nick Turse, Tomdispatch.com. Posted February 23, 2009.

Things are only slightly better eight miles north in Firebaugh (population: 5,700), which saw its jobless rate climb to nearly 23%. In that town, too, the crisis is intimately linked to drought conditions across California. "I would call it the perfect storm or compound crisis," said Firebaugh City Manager Jose Ramirez.

In Rio Vista, a town of about 7,000, "plummeting property and sales taxes and building fees due to the housing bust, and a drop in funds from the state" have led to a $900,000 deficit in the local budget, according to a report in the San Francisco Chronicle. As a result, Rio Vista was forced to lay off four employees and leave 20 already vacant full-time jobs empty, freeze salaries, cut recreation programs, and adopt a four-day work week at city hall. The austerity plan has so far staved off bankruptcy, but the wolves at the town's door didn't have far to travel to find easy prey.

Maria La Ganga of the Los Angeles Times recently reported that Rio Vista's neighbor, tiny Isleton -- a half-square mile town with just 817 residents -- is almost $1 million in the red and fighting to stave off bankruptcy, if not dissolution, due to its seemingly insurmountable debt. "Some people have said, 'Just hand it over to the county and go home,'" said City Manager Bruce Pope. But while Isleton's case is among the worst in the state, it's hardly alone in its fiscal anguish. La Ganga notes:

"Vallejo, 36 miles northwest, filed for bankruptcy protection in May. Watsonville closed all city services except police and fire for two weeks over the holidays. Calexico declared a fiscal emergency… The state's 10 biggest cities are more than a quarter-billion dollars in the red this fiscal year. Next year, San Francisco and Los Angeles predict a combined $1-billion deficit."

Big Cities Going Bust in Tough Times

San Francisco and Los Angeles are far from alone. The one- or two-factory towns lacking economic diversity and suffering mightily for it may be harbingers for the fate of the bigger cities, many of which are already facing financial hardships. After all, as CNN reported, Labor Department statistics show unemployment rates rising "in 98% of metropolitan areas across the country in December."

In Chicago, recently named "the third most miserable city" in the United States by Forbes magazine, "unemployment is expected to rise to 9.2 percent… and major layoffs have hit local powerhouse employers including Midway Games, Motorola and the University of Chicago Medical Center."

In January, during his fourth State of the City message, Mayor Jerry Sanders of San Diego painted a typically grim picture, citing "a $54 million deficit, scaled-back city services, higher fees, layoffs and mandatory water rationing." And it could get much worse, he told San Diegans. "This year, an even larger deficit looms. Sacramento [the state government] is more likely to hurt us than help us, and we'll again need to make painful decisions. That scenario could repeat itself, next year and the year after." Subsequently, Rani Gupta of VoiceOfSanDiego.org -- San Diego's non-profit on-line site that has been hailed as a new model for news gathering -- reported that estimates of the city's budget gap by a former mayoral candidate's think-tank actually top out at more than double the mayor's figure -- an astounding $128 million.

In New York City, 65,000 jobs were lost in the last three months of 2008 alone, while the jobless rate jumped from 6.3% to 7.4% between November and December. Mayor Michael Bloomberg has estimated that an additional 300,000 job losses, including 46,000 fewer jobs on Wall Street, are expected to clobber the Big Apple by year's end. At the same time, a report by investment bank UBS suggests that such losses may translate into a 10.5% unemployment rate, "a level not seen since the mid-1970s."

Meanwhile, New York's Metropolitan Transportation Authority (MTA) is considering a 23% increase in fares and tolls, the elimination of multiple subway lines and more than 24 bus routes, among other measures to help close its own $1.2 billion budget gap. The MTA is just one of many big city transportation authorities looking to make giant cuts in tough times. Recently, the New York Times reported that "[t]ransit systems across the country are raising fares and cutting service even after attracting record numbers of riders last year." A particularly dire case is St. Louis, where "despite rising ridership, the transit system plans to lay off a quarter of its work force and make drastic service cuts to balance its books." Boston, Atlanta, and San Francisco are facing similar tough choices when it comes to cutting subway or bus services, raising fares, and potentially leaving significant numbers of city and suburban dwellers high and dry.

See more stories tagged with: economy, bankruptcy, main street, municipal government

Nick Turse is the associate editor and research director of Tomdispatch.com. His first book, The Complex: How the Military Invades Our Everyday Lives, an exploration of the new military-corporate complex in America, was recently published by Metropolitan Books. His website is Nick Turse.com.

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