When it comes to facing crippling deficits, Detroit is far from alone. The federal government is more than $7.5 trillion in debt, according to a U.S. Treasury Department Web site that posts daily updates on the nation’s debt. Liz Boyd, a spokeswoman for Governor Jennifer Granholm, says the state of Michigan is facing a deficit of about $370 million.
At the municipal level, Ann Arbor officials are dealing with a projected $6.1 million deficit, The Ann Arbor News reported earlier this month. Across the country, cities from Chicago to Pittsburgh to Philadelphia are all facing budget crunches, says Robert P. Strauss, a professor of economics and public policy at Carnegie Mellon University in Pittsburgh.
“In the industrial heartland of America, municipal recovery has been slow at best.” Strauss says. “Given local officials’ desire to induce companies to locate (in their cities) with property tax breaks … local revenues have been sluggish.”
City income also declines as residents move farther out into the suburbs, taking their tax dollars with them, Strauss says. Solutions include enacting commuter taxes and putting an end to tax-exempt properties, but Strauss says none of these strategies are popular with voters or politicians.
Akron, Ohio, Mayor Don Plusquellic, who serves as the president of the U.S. Conference of Mayors, says recent federal tax cuts have also had a devastating impact on cities, which are expected to maintain their services while receiving less money from the state and federal governments.
“We’ve had an economic downturn coupled with a philosophical change and almost religious call to cut taxes,” says Plusquellic, whose own city is facing a 1 percent decrease in income. “When those things happen, the president, Congress and state legislators look like heroes, when all they’re doing is pushing it down to the local level.”
“It’s the most unfair way of taxing.”Katie Walton is a freelance writer. Send comments to [email protected]