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Big city money nightmares

Paul M. Green


Back in the mid-1950s a longtime academic observer of Chicago government wrote, "Money is the life blood of municipal management, and the solution of financial problems is one of the major responsibilities of city authorities."

A generation later following the turbulent 1960s, the New York Times issued a special publication entitled "Cities in Trouble," which analyzed in a series of articles a long list of critical urban ills none of which dealt with expenditures or revenue.

Today big city mayors are almost totally consumed with financial problems. It is so bad in New York that Mayor David Dinkins is forced to turn off every other street-light to save money. Few mayors would question the idea that money is the "life blood" of municipal operations. In fact many of them are spending much of their time searching for dollar transfusions to help their urban balance sheet.

Has it always been this way and why has the problem become seemingly more acute in recent years?

Since the beginning of mass immigration in the early 19th century (and probably before that as well) American big cities have been a destination point for newcomers. Moreover, as the American frontier began to close and the country moved away from its agrarian roots, rural migration added further impetus to big city growth. By the turn of the 20th century big cities represented hope, jobs and a better future.

At the same time these same urban centers had many of their neighborhoods filled with poverty, crime and despair. Two factors were key to this seemingly urban dichotomy: (1) The rise up the economic mobility ladder for some urban dwellers was easier and quicker than for others; and (2) the constant movement of new aspiring residents into the city put continuous pressure on government to provide essential services for its less fortunate citizens.

What was different then from today was that all the action took place in the city. Finding a better job meant working in a different part of the city. Finding a better house meant moving to a new city neighborhood. Finding a better education for your kids meant having them go to a higher quality public or parochial school in the city.

A disproportionate number of taxtakers . . . live in big city America while many taxpayers . . . have found a new home in expanding suburban America

Little or no suburban competition meant city tax rolls were not endangered by individual socioeconmic advancement or corporate growth and expansion everything remained in town.

Not so today. A disproportionate number of taxtakers (those receiving more in service than they pay in taxes) live in big city America while many taxpayers (both individuals and businesses) have found a new home in an expanding suburban America.

In 1900 over 9 of 10 Cook County residents lived in Chicago. In 1991 suburban Cook County's population almost equals

38/July 1991/Illinois Issues

Chicago's, and when the residents of its five collar counties are added into the mix, Chicago is a population junior partner compared to its suburbs.

While big city mayors scream, "Revenue, where are you?!" the federal and state governments are fighting their own financial battles and wind up downscaling (their support for urban America. According to a recent study of the Regional Partnership of Metropolitan Chicago, "Federal aid fell sharply during the Reagan years, reversing the expectations of the 1960s and 1970s that the federal government would help local governments meet increasing costs. From 1982 to 1987, real per capita aid from the federal government to Cook County governments fell 36 percent. ..." This trend has the potential for altering a delicate redistribution of resources.

Seldom explained are the historic economic and demographic intergovernmental trade-offs occurring in the last several decades. National and state governments (increased their funding for big cities with the Great Society. This surge of funding was given to cities in large part to offset the financial loss to the big cities of their middle-class residents and business enterprises. In essence, nonurban dwellers paid a kind of public insurance policy tax to contain the big city poor and allow themselves (especially suburbanites) to develop their own communities.

Now federal aid has ebbed. Consider the federal share of local government spending in Illinois as reported by the Regional Partnership: In 1961 the federal share was 1.4 percent; by 1979 it was 11 percent; and by 1988 it was down to 5 percent.

In sum big city mayors are engaged in the battle of the budgets their own as well as those in Washington, D.C., and their own state capitols. The viability of many once-proud and productive American big cities is on the line.

Ironically the potential financial nightmare in the big cities has had one positive effect on the much debated and publicized racial crises of U.S. urban areas. It matters little whether the mayor is black or white. To implement social and political change, the only color that counts is "green," and all the big city mayors share the same frustrations over finances.

Paul M. Green is director of the Institute for Public Policy and Administration, Governors State University.

July 1991/Illinois Issues/39

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