Hamtramck, Michigan, is running out of money. City Manager William Cooper tells The New York Times: “We can make it until March 1—maybe.” And Hamtramck is not alone. According to the Times, 15 municipalities have pursued bankruptcy in the past two years. And if the economy does not improve revenues, many other local governments will be in the same boat. Many of these cities, like Hamtramck, have already cut spending on parks, senior centers, and road maintenance. But there is one area they can’t cut: salaries, benefits, and pensions of …
The year 2011 will be the year of decision for underfunded state and local governments with pension and debt problems. The end of federal money from the stimulus package that many cities and states have used to prop up their finances, combined with the outsized cost of meeting their pension promises, will force a growing number of these governments to act. The immediate reaction for many will be to try to pass the cost onto the federal taxpayers in the form of a bailout, but Congress should strongly resist any …
Earlier this week, we pointed out that, under President Barack Obama, the dependency of the states on the federal government has reached a threatening and historic high. As USA Today sums it up, “In a historic first, Uncle Sam has supplanted sales, property and income taxes as the biggest source of revenue for state and local governments.” There are lots of reasons to oppose this, ranging from its inevitable inefficiency to the unaccountability it fosters. But the most basic reason of all was one President Reagan understood well: the U.S. …
When it comes to retirement and pension benefits, federal, state, and local government officials have all been humming the same mantra: never pay for something today if you can put off paying for it until tomorrow. Unfortunately, tomorrow is here. The federal government is on the hook for $41 trillion in unfunded obligations for Social Security, Medicare, and Medicaid, and state and local governments owe an additional $1.5 trillion to their state employees for health and pension benefits. The national reality of these promises started hitting home this year when …
Slowly but surely Washington is acknowledging the high cost illegal immigration inflicts on local governments. Today the New York Times reports on a study by the University of Arizona and San Diego State University showing counties along the Mexican border spent $1.23 billion processing illegal immigrants through their justice systems between 1999 and 2006. Cochise County, Arizona, supervisor Paul Newman told that Times: “This is a huge problem because we can’t keep up fixing roads, the other costs of law enforcement, keeping up health agencies.” Heritage research shows the costs …
