Mayor Schmoke bit the bullet last week and ordered major reductions in city services from libraries to schools to firehouses to meet a $27 million loss in state aid. But while the city's long-term budget crunch was pitched into crisis by this year's recession, the crisis won't pass even when the economy recovers.
That's because the structural trends giving rise to Baltimore's fiscal squeeze -- a shrinking tax base, middle-class flight and the end of federal aid -- will remain essentially unchanged. The city is the state's employment center. Yet because the largest fraction of income tax revenues from commuting workers goes to the subdivisions where they live, rather than where they work, Baltimore profits little from its role as regional economic engine.
Historically, cities solved this dilemma by simply expanding to incorporate the surrounding suburbs into the municipal tax base. But that's no longer an option.