While the Federal Governments in the US and Canada throw stimulus money to the wind, the Municipalities are on the front line of debt, foreclosures and real service cuts. Here’s a sample of my reading list from this week on this topic.
The City of Iqaluit continues to struggle with homeowners who don’t pay their property taxes, although its arrears list totals nearly $1.5 million.
There are currently 56 names on the city’s arrears list, including 12 businesses, in the city of about 6,200.
Almost 80 per cent of the debt is owed by individual homeowners, with some owing upwards of hundreds of thousands of dollars.
Public services in the US city of Chicago have been shut down for a day as the authorities face an expected budget shortfall of some $300m (£184m).
Non-essential services such as rubbish collections, libraries and health centres were closed, in the first of three planned reduced service days.
City authorities hope the move, with workers taking an enforced unpaid holiday, will save an estimated $8.3m.
“The reality for local government is they’re probably in (fiscal year) ’09 seeing the decline in property taxes in concerted fashion for the first time,” said Hoene. “That means 2010 and 2011 are likely going to be more of the same. Even if a recovery in the housing market begins right now, they’re still a couple of years away from seeing any rebound in those revenues. We’re just entering the woods.”
The problem is not limited to residential properties. A decline in commercial real estate values is also cutting into local tax bases.
“We’ve got a ton of businesses that have gone out of business and we’ve got empty buildings here that people have picked up and left or filed bankruptcy,” said Elkhart Fire Chief Mike Compton.
Other sources of revenues are also down. Local governments that rely on sales taxes have been hit by the drop in retail spending. And state governments have cut back on revenue they pass through to municipalities.
The long-anticipated report was released by the City Council’s Select Committee on Pensions, created last summer to look at the city’s pension obligations — its future debts to cover benefits for workers and retirees. Last year, those obligations totaled almost $1.2 billion, dwarfing other city costs. This year, after the world recession, pension costs are expected to increase because all the pension funds have lost money in the stock market and other investments.
“What we have is not sustainable,” said councilman Howard Shook, who co-chaired the committee.
Hard times are causing more homeowners to fall behind on their property taxes. But in thousands of cases, they are not responsible to their local governments, but to private companies that charge double-digit interest and thousands of dollars in service fees.
This is because in recent years struggling cities and counties have sold their delinquent tax bills to the highest bidder. It seemed a painless way to turn old debts into cash to finance schools or public services.
But housing advocates say the private companies may be exacerbating the foreclosure crisis, pushing out homeowners faster than would governments, which are increasingly concerned about neighborhoods becoming wastelands of abandoned properties.
Facing billions in needed improvements to its water and sewer systems, the city is considering making drastic changes to the way it runs those utilities to help cut costs.
Later this week, city leaders will begin mulling suggestions. Those could include merging water and sewer operations, using new waste-to-energy technology and considering alternate financing structures such as public-private partnerships.
Nashville is one of several U.S. cities that these days are accommodating the homeless and their encampments, instead of dispersing them. With local shelters at capacity, “there is no place to put them,” said Clifton Harris, director of Nashville’s Metropolitan Homeless Commission, says of tent-city dwellers.
In Florida, Hillsborough County plans to consider a proposal Tuesday by Catholic Charities to run an emergency tent city in Tampa for more than 200 people. Dave Rogoff, the county health and services director, said he preferred to see a “hard roof over people’s heads.” But that takes real money, he said: “We’re trying to cut $110 million out of next year’s budget.”