Governments Collapsing In Tough Economy
In the Wall Street Journal today, an article is published that details how cities are disincorporating as a result of the declining economy. Cities are dissolving themselves in order to escape city union contracts, among other things.
As the recession batters city budgets around the U.S., some municipalities are considering the once-unthinkable option of dissolving themselves through “disincorporation.”
Benefits of this move vary from state to state. In some cases, dissolution allows residents to escape local taxes. In others, it saves the cost of local salaries and pensions. And residents may get services more cheaply after consolidating with a county.
In Mesa, Wash., a town of 500 residents about 250 miles east of Portland, Ore., city leaders have initiated talks with county officials about the potential regional impact of disincorporating. Mesa has been hit by a combination of the recession and lawsuits that threaten its depleted coffers, leaving few choices other than disincorporation, said Robert Koch, commissioner of Franklin County, where Mesa is located.
Two California towns, Rio Vista and Vallejo, have said they may need to disincorporate to address financial difficulties; Vallejo filed for bankruptcy protection last year. Civic leaders in Mountain View, Colo., have alerted residents that they are left with few options but to disincorporate because the town can’t afford to pay salaries and services.
Incorporation brings residents a local government with the ability to raise money through taxes and bond issuances. It also gives them more control of zoning decisions and development, and usually provides for local services such as trash pickup and police as well.
On the national level, the Federal government would simply cease to exist. You’re probably wondering that’s not possible. Well, given the extreme financial conditions of borrowing nearly 50 cents of every dollar spent, fighting two wars, having massive entitlements like Social Security and Medicaid that cannot be funded at current levels of taxation, having government expand at unparalleled levels, and the fact that Americans are already spending nearly half their income in taxes and other compliance costs as is; perhaps the Federal government may have to disincorporate.
The problem is cultural, we Americans have never learned to live within our means. That’s why we have the credit crunch and that’s why we have these outrageous government programs we can’t fund. We need to have a serious discussion about the role of government and how we should pay for it.