Quote of the Day: Neal Peirce

From Peirce’s column on Citiwire.net:

Cities’ revenues will plunge sharply as property taxes, in their first year of recession-impacted reassessments, get set to decline deeply in 2011. Local government fiscal shortfalls may total $83 billion, which the League of Cities estimates may force up to 500,000 staff reductions. Basic city services will shrink. Infrastructure projects will get cancelled or postponed.

These are hard times for America’s local governments. Economists may declare the Great Recession is “over,” but localities see a different picture. The federal stimulus monies that helped so many of them balance their budgets runs out December 31. So does Washington’s two-year old “Build America” bond program, which has made local infrastructure borrowing more affordable.

State and municpal governments face nothing but hardship in the years ahead. It’s time for fundamental change, not the usual short-term 3%-budget-cuts-across-the-board belt tightening. If we fail to rise to the occasion, we face a future of entropy and decay.

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11 responses to “Quote of the Day: Neal Peirce”

  1. what this translates to in places like Va – is impacts to the employment of teachers and law enforcement at the local level.

    Stafford County, for instance is looking at a 10 million dollar shortfall in a county of about 130,000 citizens.

    10 million may not sound like much when we often talk billions and even trillions but in Stafford County – it means choosing between 200 teachers or a ten-cent increase in the property tax rate.

    Stafford is essentially a commuter-centric exurban bedroom community to NoVa.

    It, and it's neighboring county to the South – Spotsylvania both have seen and continue to see significant mortgage defaults and a substantial percentage of home sales are either defaulted properties or "short" sales.

    Senator Houck – who represents much of the region and is on the Senate Finance committee has offered a more optimistic view that tax revenues at the state level have stopped falling and appear to be increasing ….again but I'm betting that the State is not going to be in a position to rescue the counties and localities from the "stimulus cliff" they face – that held them relatively harmless in the last 2 years.

    all to say.. that Jim's tome here is dead on target.

  2. Anonymous Avatar

    Thank you for this quote, Mr. Bacon.

    This is a much bigger problem than anyone yet understands.

    I heard Prof. Risse give a talk to a group of business leaders in the SubRegion recently.

    “The Current Trajectory”

    He pointed out that respected institutions like the Lincoln Land Institute (“What the Housing Crisis Means for State and Local Governments”) are down playing this problem.

    LLI held a major seminar – cited in the article – and decided it was ‘not a problem’ because property tax receipts were ‘holding up.’

    That is not what one reads in the regional press but it is what the municipal ‘leaders’ hope is going to happen – this was just another recession like the last seven and everything will be fine.

    Prof. Risse has some startling data based on Radial Analysis of the impact outside the logical location of The Clear Edge.

    That is where Mr. Gross lives.


  3. "we face a future of entropy and decay. "

    That's all you need to say right there.

    4 million formerly working Americans will exit the labor pool between now and the end of January. While that will help the unemployment rate illusion, those millions will be cast aside in a nation increasingly unable to recycle them. The clock is ticking on millions more.

    As senior citizens are increasingly looking for work because their Social Security checks aren't enough to survive, the boomers are applying for SS earlier. Even more troubling are the almost boomers who are becoming 'disabled' when their unemployment runs out.

    Others out of the work force have been attending school paying through the nose to major in what they think are key jobs, which won't be by the time they graduate.

    America has become a herd of individuals who stampede far and wide only to end up in the same box canyon.

    You will find local government there as well, warily watching the high walls for falling mandates.
    Anything the Feds or states toss will really stink up Podunk. But we aren't alone.

    Our nation is one of hundreds facing the same issues. What is happening in the EU will soon become a world wide phenomenon, as countries cut each others throats in the attempt to be the last to drown in a sea of debt. For the hopeful, our canyon might as well be the Mariana's Trench.

  4. OWWWWW !

    unfortunately I don't see from where we are right now an up side to folks who have been out of work a while or seniors who want to come back into the work force.

    or I should say – ENOUGH spots to accommodate all the folks who want to.

    I do not think this particular phenomena has a whole lot to do with what caused the meltdown.

    It probably was building all along …rotting from the core and then the meltdown exposed it.

  5. Groveton Avatar

    This is somewhat on topic. I think it is a very good view of the banking industry and why the fit hit the shan a few years ago. Interestingly, in the author's opinion, little has fundamentally changed.


  6. If they lay off enough people and they wind up working construction, then maybe it will be easier to get a permit.

  7. Anonymous Avatar

    As former Fairfax County superintendent of schools Daniel Domenech once wrote to me, "We don't get rid of employees in good times." And his successor, Jack Dale, has demonstrated, they don't get rid of employees in tough ones either. FCPS has about 1500 specialists who rarely, if ever, enter a classroom.


  8. of all of the supposed big and bloated "govt" institutions – it's my view that local schools in many places in Va are among the worst offenders – trying to be everything to everyone and sparing no expense towards that end.

    And… in Fairfax's case, I've never seen a taxpayer revolt on the cost of schools.

    For the most part, Fairfax / NoVa seems to be very happy with their very expensive school system(s).

  9. Anonymous Avatar

    Larry, what you describe has been correct historically (and will be true forever for some people). However, with the bubble-bursting and economic problems that don't seem to go away, I have noticed that more and more residents of Fairfax County, including PTA leaders, have become concerned not just with the amount of money spent on education, but also how that money is spent. I think this is a good development for both taxpayers and parents of public school students — of which I am both.


  10. Look, if we had only three times the military might of our nearest rival, then there would be plenty of money for everything else: schools, social security, Medicare, national debt, border patrol; all of it.

  11. we envision our country as the biggest baddest country in the world with a lot of enemies that we must guard against.

    Much like the wealthiest amigo in a town full of thieves an murderers so we must have a virtual wall around our hacienda and only travel outside the walls with a convoy of bodyguards and ample armament.

    We have to do this even those the tires on our car are bald and our roof leaks and we can't afford medical care.

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