"Race to Solvency" for our cities?
A press release from the Milken Institute notes:
Vallejo, Calif; Harrisburg, Penn; the entire state of Illinois; and, of course, California…they’re just the tip of the iceberg. Across the United States, we’ve got a full-blown state and muni budget mess on our hands.
To find a way forward, the Milken Institute and the Kauffman Foundation brought together a diverse group of state and local officials, union representatives, experts from the capital markets, money managers, academics, public-sector attorneys and representatives from bond rating agencies.
The report, Ensuring State and Municipal Solvency, lists a number of potential reforms, including the establishment of rainy-day funds, agency consolidations, and control boards for states and municipalities.
Yup. We got those things. Have helped, but not to the degree we’d hoped, for lack of proper use by state leaders (think of the lost opportunity in Lawrence where a control board would have been the right way forward).
There are some really tough reforms, such as making bondholders, union representatives, public-sector employees and taxpayers all share in taking a financial hit to ensure long-term stability of pension and benefits programs. Hmmm. I am not sure who is advising the Milken Institute on political reality.
But the reform I like best — because we’ve been ahead of everyone on it — is their call for incentives to municipalities to get their financial house in order, what they call a “Race to Solvency modeled after the [US] Department of Education’s Race to the Top.” Check out our recent paper on this reform, as well as a longer piece on how to breathe new life into our older, industrialized cities.