A 12-Step Program for Financially Insolvent Cities

I’ve been to far too many local meetings where dire financial numbers are presented to an elected body, only to watch as the information is ultimately dismissed. Our backlog of road maintenance requires a 4x increase in the road budget to catch up. Our city hall is crumbling and is going to require xx millions we don’t have in repairs. Our pension fund is underfunded to such a degree that, even with unrealistic projections for future returns, we will never catch up. We need double the number of maintenance workers we have if we are to provide basic maintenance to all the park space in the city...

“They were already keenly aware that they were in a lot of trouble. What they needed, and what the community as a whole needed, was more akin to an intervention.”

I’ve heard these all, and more, throughout my professional career. The most troubling thing is not that they are dismissed but the reason why: nobody knows what to do. City after city is struggling with massive budget shortfalls – structural insolvency resulting from years of bad development and investment practices – and the numbers are so overwhelming that they are paralyzing.

There are many times I sat there listening to this conversation play out, thinking that these public officials didn’t really need another report at all. They were already keenly aware that they were in a lot of trouble. What they needed, and what the community as a whole needed, was more akin to an intervention.

Twelve step programs are an important way for those who have hit rock bottom to set themselves on a different course in life. Here’s how leadership in a struggling place can adapt that thinking for a community that wants to come to grips with financial insolvency.

1. Admit that there is a problem.

With our city struggling with financial insolvency, we must admit that there is no amount of growth that can reasonably be anticipated, no level of taxation that we can apply and no amount of debt we can assume that will solve the financial problems we face. We can’t grow, tax or borrow our way out of the mess we are in. We need a change in approach.

2. Understand that there is no simple solution.

The change in approach we seek is not going to involve one or two policy tweaks but will require a broad rethinking of policies, programs and priorities. The change should feel more like adopting a healthy diet with regular exercise than like a discovering a wonder drug.

3. Decide that this situation can only be addressed by the broader community being served.

There is no way to force a lifestyle change on people who do not want it. The change that is required of us can’t be made by public officials alone; it requires the deep commitment of the entire community. We must agree to make the conversation theirs.

4. Take an honest inventory of the community’s financial condition.

It is our challenge to make an honest account of the city’s financial condition. What are the promises we have made – infrastructure we will fix, pensions we will pay, parks and buildings we will maintain, services we will provide – and how much does that really cost? What are the revenue sources we can confidently rely on and how much will they provide?

5. Acknowledge to the community how bad the financial gaps are.

We must share with the broader community our inside knowledge of just how difficult the financial situation is. The goal is not to scare people to action, but to provide a sober and honest assessment of the extent of our promises and the revenue shortfall we have to face up to. The community needs to have a shared understanding of our financial condition.

6. Be ready to address specific failings that led to the present situation.

It is our collective actions that have brought us to this situation. The elected and appointed officials of the community, past and present, broadly representing the will of the community, made commitments that the community is not able to honor. In general, these decisions were accepted practice for cities like ours, within the community and across the country, but that does not make them right. We have a new understanding now, and with fresh eyes, will reexamine the decisions of the past that brought us to this point.

7. Commit to a new approach to community prosperity, one that is based on financial solvency.

We must publicly state we will make the long term financial health of the city this community’s top priority. If we cannot meet our commitments, if we default on the promises we’ve made to our people, if we are not reliable stewards of the public’s trust, the people of the community will suffer for it. Therefore, we must commit to finding ways to improve the prosperity of the community without compromising our financial strength and resiliency.

8. Identify those who were hurt by prior policies, as well as those who will be challenged by a change in approach.

Our inability to fully meet our past promises has harmed, and will in the future harm, members of our community. We must acknowledge this and work to identify those who have suffered, and will suffer, because of our financial insolvency and the choices we are making to address it.

9. Communicate directly with those who have been hurt, and those who will face challenges with a change in approach, listening more than explaining.

As we take action to address our community’s financial insolvency, we must not shelter ourselves from the pain that our past actions, and our present situation, cause others. We must acknowledge their suffering, work to understand the extent of their pain and seek ways to minimize the harm being done.

10. Continue to take account of the community’s changing financial health, ensuring financial solvency is central to the community’s ongoing conversation.

We must continually account for the ongoing revenues and expenses of the community, weighing our present actions against our long term financial solvency, honestly measuring the impacts of our policy decisions against projected outcomes, and publicly holding ourselves accountable for results. We must make this conversation central to our community’s dialogue.

11. Seek ways to improve the quality of life while continuing to improve the financial health of the community.

With the long term financial health of the community as our top responsibility, we must continually seek ways to improve the quality of life for those living within the community. Our top objectives are policies and programs that strengthen the city’s financial health while simultaneously improving the quality of life for residents.

12. Support other communities as they struggle with their own financial insolvency.

We are one place in a nation of communities struggling under the weight of decades of bad fiscal management at the local level. Once we are on a healthy track, it is our duty to share what we’ve learned with others and to support other cities as they travel a similar path.

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