Opinion

Neal R. Peirce: Local governments struggling to cope with recession

The recession is driving America's city governments into an epic fiscal storm. Unlike earlier downturns, all three big revenue sources — income, property and sales taxes — are falling together. Cumulative budget shortfalls are already in the tens of billions and rising.

Among America's 87,500 governments, only Washington can print money. In a pinch, the only real option for cities and states is to spend less — thereby taking money out of the economy and deepening a recession. With more than 20 million employees, 14 percent of the total American work force, states and cities are a significant part of the total national economy.

This recession seems sure to be so serious, say urban finance experts, that many cities will be forced to go well beyond their familiar tight-times reductions in park and library budgets. A growing possibility: to cut into that historically inviolate sector — police officers and firefighters.

Together, police and fire operations consume the lion's share of most local budgets. And the fire operations represent the most wastefully managed part of local government, according to municipal experts who spoke as a panel at a National Academy of Public Administration meeting last week.

A leading critique: three-man crews on fully rigged fire trucks rushing to the scene of all alarms, all but a tiny fraction of which — given modern wiring, sprinklers and other fire-prevention techniques — turn out to be false.

Equivalent safety results, say the municipal critics, could be accomplished by dispatching one firefighter in a single car to an alarm scene, rapidly summoning major-scale equipment and crews when there's a serious fire emergency.

In fire departments that offer emergency medical care, 80 percent of the budget is spent on the 20 percent of the activity that's actual fire suppression, said John Shirey of the California Redevelopment Association.

Another panelist added: "The one thing that exceeds the inefficiency of fire departments is the political power of the fire unions."

The most logical step would be merging of police, fire and emergency services, with all personnel cross-trained. Fire and police unions won't hear of such multitasking.

But in a prolonged, tough recession, resistance could weaken.

In Vallejo, Calif., public safety spending got so out of hand that the city declared bankruptcy in May. And small wonder — police captains are paid more than $200,000. After five years of service, Vallejo public safety officers and their families get lifetime health coverage. And after working 30 years, it's 90 percent of last pay for life — all benefits unthinkable in the world of fast-disappearing defined-benefit pensions that most tax-paying citizens face.

The nation's municipal bond markets — relied on by states and localities to even out revenue flows or finance capital projects — are now virtually shut down. Yet it's not municipal lending that triggered the national financial havoc of the last several weeks, notes Shirey. He appropriately blames the shenanigans of the private financial sector, with the major national credit rating agencies asleep at the switch. Municipalities rarely default, but they are having to take a big part of the hit, obliged to streamline and economize as never before.

How to do it? There's an oft-neglected candidate: corrections. Because of politically motivated mandatory sentencing legislation, prisoner rolls have been growing rapidly, reaching world-leading shares of the total population.

Complains Maricopa County, Ariz., Manager David Smith: "We have 40,000 felony cases yearly and corrections costs us $819 million! We built a very large big new jail, and it's full again. We're going broke slowly with this criminal justice system."

So Smith has launched a major prisoner re-entry program in South Phoenix, a 10-block area with 300 ex-felons and people still on parole. "We call it the $50 million ZIP code," he says, because of the costs the criminal justice system incurs there. Smith has co-located 15 services for homeless people in the area, partnering with churches and nonprofits. The program: help released prisoners get identification, find needed services, put some money in their pockets if they stay out of trouble and find jobs.

The same approach, applied to corrections nationally, could likely save stunning sums over time. It's needed more than ever in tough times.

Redrawing borders and merging some city and county governments, going "green" with energy-saving fuels and carbon-conserving buildings — all sorts of ideas, too controversial for normal times, may now have their day.

In dark times, it won't all be bad news.

Peirce is a syndicated columnist who specializes in city and state affairs. (nrp@citistates.com)