Higher taxes and dirt roads to balance budgets
As I have been saying for years, municipal budgets are an often overlooked crisis brewing. Today it is reported that now the Capitol of the State of Pennsylvania is heading towards bankruptcy. This news is reported like any other
random story, and its significance is not realized generally. “There’s never been a default like this in Pennsylvania municipal history,” Carol Cocheres, Harrisburg bond counsel said. “This is all new territory.”
According to government officials, “every option, including tax and fee increases, bankruptcy and a state takeover through Pennsylvania’s Act 47 municipal oversight program will be considered.”
What can citizens of Harrisburg, and other municipalities expect to experience as their governments struggle to survive financially?
In several states, including Pennsylvania, the answer is dirt roads. With insufficient funds to maintain paved roads, a growing number of states and counties are letting roads revert back to gravel. The USA Today article reports that “Gravel roads, once a symbol of quaint times, are emerging as a sign of financial struggle.” While states like Michigan, Maine, Vermont, and Indiana are taking this step, some safety experts are concerned about the danger this poses to drivers. “None of these decisions should be made overnight,” said Chris Plaushin, director of federal relations at AAA. “I think that gravel brings some conditions that they may not be used to. The drivers are going to have to exert a little more caution.”
In Phoenix, the answer to the budget crisis is higher taxes on groceries. “Desperate to save police, fire and other city jobs, a divided Phoenix City Council on Tuesday approved a sales tax on grocery items that will generate tens of millions of dollars a year. The tax on milk, meat, vegetables and other food purchased by shoppers will generate an estimated $12.5 million for the fiscal year that ends June 30. It will raise another $50 million for fiscal 2011.”
Taking more money from already strapped citizens is not an easy decision, but one that is necessary to maintain emergency services, according to government officials. “There are services, and there are critical services,” president of the United Phoenix Firefighters Association Pete Gorraiz said. “In our business, if you start taking away our ability to meet response times, it’s literally the difference between life and death.”
“You can’t do that to people right now in this market. They’re being crunched in every possible way, and this was the only area they were not being taxed on,” said Ken Schnitzer, a grocery store owner.
In any case, we can expect to pay more, and receive less in terms of a service network as the recession progresses.
[...] a follow up to yesterdays post about how some states are so underfunded they are being forced to revert to dirt roads, there are more examples of what Americans can expect in coming [...]