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Today, Michael Nutter, Mayor of Philadelphia, the nation's 6th largest city, will travel to DC to present a letter asking for help from the Federal government.
Philly is in trouble, with tax revenues down so sharply that the City is facing a shortfall of more than $107 million this year, and over a billion dollars over the next five years. For the things under their control, the Nutter administration has proposed massive cuts. In addition, Nutter has taken a pay cut, and asked all elected officials to do the same. Further, he has asked departments to find ways to further cut their budgets.
The cuts will affect most all aspects of living in the city. And it still may not be enough to provide basic services, such as fire and police.
In mid-October, then-candidate Obama proposed a Four-Point Economic Plan. The fourth point was:
4. RESPONDING TO THE FINANCIAL CRISIS: A Lending Facility to Address the Credit Crisis for States and Localities. Obama is calling on the Federal Reserve and the Treasury to work to establish a facility to lend to state and municipal governments, similar to the steps the Fed recently took to provide liquidity to the commercial paper market.We can only hope that the current administration sees things this way. Back in the mid-70's we almost lost New York City to a financial melt-down. The City of Bridgeport, CT, actually did go bankrupt in 1991. It took six years for the recovery to really take hold. Bridgeport is much smaller than Philadelphia, and the overall financial situation was better in 1991.
I don't know what happens if a major city goes bankrupt. Does the National Guard get called in to replace the police and fire? What do at-risk kids, all kids, do if there are no libraries, no public swimming pools, maybe no schools? Does business flee for the suburbs? Does everyone who can leave, leave? What happens to the tax rate of those who stay? I don't know, and personally, I don't want to find out.