Cities forced to cut services

October 23, 2011 at 12:00a.m.

McClatchy Newspapers

KANSAS CITY, Mo.

The last person to leave Highland Park, Mich., will soon have fewer lights to turn out.

Officials with the private electric utility there are repossessing 1,400 streetlights and poles. The city — facing a severe budget crunch — owed the company $4 million, a debt the company canceled in exchange for taking its lights back.

At least Highland Park is still solvent.

Last week, city officials in Harrisburg, Pa. — the state’s capital — decided to seek bankruptcy protection, in part because the city is on the hook for millions of dollars used to rebuild a power- generating trash incinerator.

Municipal bankruptcy and repossession are extreme cases, but no longer unheard of in America.

From Rhode Island to California, hundreds of city governments — after staggering through three years of national economic doldrums — are ending this year facing even more layoffs, unpaid furloughs and service cuts to balance their out- of-whack budgets.

“The effects of depressed real-estate markets, low levels of consumer confidence and high levels of unemployment will continue to play out in cities through 2011, 2012 and beyond,” concluded a September report by the National League of Cities, calling depressed city budgets and worker layoffs a “new normal.”

Nancy McCarthy Snyder, an urban-affairs professor at Wichita State University, said cities now are hitting the bottom of the recession slump in part because lower property values finally have worked their way into the system.

And lower property values mean lower property-tax collections.

“Cities are facing a whole mix of issues that are coming to roost all at once,” Snyder said, including the end of federal stimulus spending.

In Kansas City, City Manager Troy Schulte instituted a hiring freeze last week, citing softer-than-expected tax receipts.

“We are holding our own at this point, but we do have challenges,” said Councilwoman Jan Marcason, chairwoman of the finance and governance committee. “And next year’s budget is going to be very difficult.”

The city council this year approved raises for firefighters, and other municipal employees now are clamoring for more money. If the city met all those demands, it could cost taxpayers an additional $10 million at a time when revenues are flat, although Schulte said he’s working hard to avoid the shortfall.

Rising pension costs for city workers also are a big worry for Kansas City.

To be sure, Kansas City’s financial picture remains strong compared with many other municipalities. City Hall has cut hundreds of jobs over the past 36 months, and revenues haven’t dropped as much as in other cities.

Other area communities are relatively healthy financially, too, and not just because they’ve cut expenses. Some Kansas cities have decided to raise taxes as well.

Overland Park increased its property-tax levy by more than 40 percent this year, after cutting some jobs and programs. Nearby Lenexa increased its levy by more than 11 percent.

“We’re going to hold the line on expenses,” Lenexa Mayor Mike Boehm said, adding: “To be honest with you, I have more people, even this year, saying to me, ‘If you need to raise taxes a little bit, don’t give up what we have.’”

In general, experts said that Kansas communities face more restrictions on spending than in many other states, helping to limit budget problems. Missouri’s Hancock amendment also helps keep public spending lower than in other states.