Date post: | 15-Apr-2017 |
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FISCAL RESILIENCE & FISCAL CRISIS: THE CASE STUDIES OF
BALTIMORE AND SAN BERNARDINO Michael Lawson
Independent Researcher and Consultant George Mason University Fiscal Sustainability Project
[email protected] 202.543.3437
Background on GMU Fiscal Sustainability Project • Fiscal challenges of cities following great recession • Granular, case-study focus of six cities • Different state oversight, regions, structures,
intergovernmental roles • Funded by MacArthur Foundation • Three-person research team (plus advisors) • My focus today: Baltimore & San Bernardino
Today’s Presentation • Background & context for each city • Both stressed, but in fundamental different fiscal
positions • Lessons learned • Implications for New England cities & towns
Bankruptcy • Economic shocks • Shocks from DC and Sacramento • Issues internal to San Bernardino • July 2012: Month of (initial) reckoning • Bankruptcy petition filed August 1,
2012 • Still in bankruptcy court to this day…
Fiscal Comparisons San Bernardino • Bankruptcy • Negative fund balance • CalPERS creditor
Baltimore • AA- rated • Fund Balance: 10% • Pensions: 82% funded
Financial position does not constitute “success” for a municipality. [Necessary, but not sufficient; output, not outcome.]
Fundamental differences • Come at this with humility in
observations • Combination of factors • Still may be additional ingredients to
the “secret sauce”
Charters San Bernardino • Exec. authority: Fragmented • Hiring & firing complicated • Budget: Fiefdoms • Salary formula in charter
Baltimore
• Exec. authority: Clear, strong • Mayor • Budget: Bd. of Estimates • Council can only cut budget
Culture of Professionalism
San Bernardino • Turnover in manager, finance • Lack of trust in numbers
Baltimore • Stability in finance, budgeting • Electeds set policy, but don’t
set financial numbers • Bd of Estimates open; 2 other
electeds
Political Culture
San Bernardino • Mentioned by everyone • Mentioned in 1981 study • Directed at city attorney, but…
Baltimore • Not mentioned by anyone • Taken for granted, unless it is
bad… • When prompted (re mayors)
State Role/IGR San Bernardino • Fragmentation, overlap
– 27% counties – 26% municipalities – 19% school districts – 28% special districts
• State filed suit against SB – CalPERS
• No emergency manager statute in state law
Baltimore • Consolidated, no overlap
– 24 counties (City of Baltimore considered county)
– 96% of LocGov Spending • State assumption
– Detention ctr; central booking – Community college – Light rail and bus systems – Stadiums, port, conv. ctr. – Partnership:Schls & HumSvcs
State Role/IGR San Bernardino • IGR: 6% of revenue • Fiscal equalization
– Little general equalization
• Other recent state actions – Redevelopment agency fees – MV fees/law-enfrcmt grants
Baltimore • IGR:27% of revenue (excl ed.)
• Fiscal equalization (general) – Disparity Grant (floor of 75%
yield statewide) • Highways grant
– 80% of statewide total • Unusual alliance among Big 3 • Baltimore-rural fiscal
interests • Gov’r w/ties to Balt,PG(since ’87)
Intra-local Equalization California • Fragmentation, overlap
– 27% counties – 26% municipalities – 19% school districts – 28% special districts
Maryland • Consolidated, no overlap
– 24 counties (City of Baltimore considered county)
– 96% of LocGov Spending • In Maryland, equalization of
taxes AND services within county first
• More fiscal room for targeting
QUESTIONS? OBSERVATIONS? DISCUSSION
Michael Lawson Independent Researcher and Consultant George Mason University Fiscal Sustainability Project [email protected] 202.543.3437