Death Spiral for Cities?

October 08, 1991

The National League of Cities has coined the phrase "death spiral" to describe municipalities bled dry by high tax rates, lower average resident incomes and changing populations. Bridgeport, Conn., which declared bankruptcy in June, was just a "fire alarm" calling attention to the increasingly precarious condition of many cities as the federal government has practically given up on trying to deal with urban problems.

"If we can declare ourselves savings and loans, maybe we might get some help," one frustrated city lobbyist suggests.

Baltimore is one of the cities victimized by the changing priorities of the administration in Washington, which keeps bailing out foreign governments and financial institutions but shows little interest in rescuing American cities.

Yet Gov. William Donald Schaefer's proposed cuts in the state budget underscore that the city's fate also is in the hands of local legislators who seem perfectly willing to play chicken with the governor, regardless of the cost in human terms. Rather than reforming the tax system, those legislators want to lower state spending, even to the point of slashing aid to local subdivisions that is supposedly mandated by state or federal laws.

Fiscal analysts are still trying to determine the full impact of the governor's $450 million budget cuts on Baltimore City. Because of its high share of poor people and other aid recipients, the city is bearing the brunt of many cuts.

For example, it stands to lose $11 million in direct revenue. Overall, Baltimore could lose a total of $21 million as a result of state cuts, Mayor Kurt L. Schmoke says. If the city dealt with the cuts strictly through layoffs, 800 of the 26,000 municipal employees would lose their jobs. "It's really devastating," said one budget official.

These are difficult times in Baltimore government. Unless state legislators wake up and take action, the Monumental City is in danger of joining the death spiral of other cities across the nation.

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