What Happens When the Money Runs out?

The Detroit and Flint bankruptcies are in the public consciousness, but in both cases the cities emerged from their crisis.  But what happens if the money really runs out?  What if a community cannot escape fiscal challenges.  All over the country there are communities, in spite of economic growth that appears to be occurring, that are at risk.  These communities are primarily rural, because the economic growth in the US appears to be primarily an urban phenomenon.  In fact, as economist Richard Florida calls “winner-take-all” urbanism.  The concept separates top tier communities -the New York’s, San Francisco’s and Chicago’s of the world from everyone else.  These large, thriving urban centers attract talent from all over their world, fueling competition for wages that cannot be challenges in smaller communities.  With US influence declining around the world, and more competition from China nd Russia, where are even more challenges for this talent. It makes the middle class smaller, creating wealthy people at the top and a lot more at the bottom.  Rural America is losing population, mostly younger people seeking better opportunities in urban areas.

Local officials have a stewardship responsibility to manage their assets.  There are no statues to officials who hold taxes down or cut services.  There are no awards for failing to plan, with reserve funds, for that day when the economy falters and revenues are short.  But what if the community cannot keep up?  Then what happens to those people?

Iowa is one of these rural states.  Iowa has 25,000 bridges and 114, 000 miles of roads they are trying to maintain.  The State does not things they can maintain all the roads, so what are they proposing?  How about abandoning plans to maintain certain roads?  The state is proposing just that action but it has challenges.  Roads never go away.  Once there is a road, people learn to rely on it. Farmers use them; taxes get paid for roads – is it fair that your road goes away?  Probably not, but this does not seem to be a sustainable approach either.  If revenues further deteriorate, do more roads go away?

Clearly there is a problem here – and maybe this confirms Dr. Florida’s thesis.