With municipalities across the area deep into budget deliberations and facing grim numbers, council members may find it useful to read a financial report prepared for the city of Gary, Indiana by Public Financial Management (PFM) at  HYPERLINK "http://www.in.gov/dlgf/files/Fiscal_Monitor_Report_12-09.pdf" www.in.gov/dlgf/files/Fiscal_Monitor_Report_12-09.pdf
While it may not seem there would be much for Southwest Ontario municipalities to learn from an American city of 100,000, phrases such as “future at risk” and  “the city must change its traditional practices quickly” should get the attention of every ratepayer and politician, as many of the economic forces that have hit Gary are also at work in Ontario and Huron County.
Other cities in Canada are also waking up to the new economic reality, such as Winnipeg, which is considering selling off naming rights to its municipal services in an attempt to raise money.
The report was prepared by PFM after Gary, which depended on property tax revenues for 80 per cent of its tax base, had the amount it could collect cut in half by a state regulation. As bad as the situation looks for Gary, however, it is already worse for Cairo, Illinois. With the town of 8,000 people $500,000 in debt, five of its seven police cars have been repossessed, with three quarters of its 29-member police force laid off.
In its report, PFM stated it was given the task to develop a workable financial structure for Gary, whose “revenue structure must change because the rules have changed.”
The report noted the economic forces, which have pushed Gary to the edge, are a result of specific and local reasons such as a reliance on property taxes, but others such as the loss of manufacturing industries are being faced by cities and towns across the United States, a situation also faced in Huron County.
The report lays out the economic future for Gary in uncompromising language, such as
“the federal Government Accountability Office (GAO) suggested that local government spending trends were unsustainable. This is not a temporary change, but a long-term readjustment of local government services across the United States.”
The reality of upper level regulations and decreased funding for Ontario municipalities is a fact of life not likely to change anytime in the next few years, with provincial and federal levels of government swimming in red ink.
The solution, as the report said is “even with some additional non-property tax revenues, Gary will have to reduce its budget and become a smaller, leaner, more effective government. Cherished services will have to be reduced or eliminated and what Gary offers its citizens will have to be extremely focused.
“In the past, a larger, wealthier Gary has been able to provide a plethora of services. As
financial resources have declined; the city has understandably tried to maintain those services at lower levels, especially with an increasingly service-dependent population. Now, however, resources will be so constrained that choices have to be made…the city should simply stop most discretionary spending.”
As the report said, “it is important to note that Gary’s financial crisis did not arise quickly and will not be solved in short order,” something that applies to everyone, on both sides of the border.