By David Eichenthal

David Eichenthal: What Washington is Doing to Prevent More Detroits

Detroit’s bankruptcy spurred a series of declarations by local government leaders across the nation as to why their city was “not Detroit.” The good news is that the number of local governments declaring bankruptcy remains relatively small – in January, Governing reported than since 2008, only 13 general purpose governments had filed for Chapter 9 bankruptcy and five of those were dismissed.

When local governments go bankrupt, it is for a variety of different reasons. Jefferson County, Alabama’s bankruptcy had roots in policy decisions regarding sewer systems dating back nearly a century. And while bankruptcy is the direct result of fiscal distress, it is frequently – if not always – accompanied by a complex interaction of land use, transportation and education policy decisions.

I wrote in The Bond Buyer about a series of steps that the Obama Administration is taking to prevent more Detroits. The main point is this: it is better to build a guardrail at the top of the fiscal cliff than to merely station an ambulance below. In other words, the best response to municipal bankruptcy is prevention – and that is just what the Administration has done through its Promise Neighborhoods and Choice Neighborhoods initiatives and – building on those efforts – through Promise Zones.

As I noted in the article, the work of the Strong Cities, Strong Communities (SC2) initiative is a critical component of this prevention-first approach:

As part of SC2, the Administration assigned teams of federal officials to work in direct partnership with local mayors on their – the mayors’ – priorities. After two year engagements with seven pilot cities, the Administration last week announced a second round of SC2 teams for Brownsville, Texas; Flint, Michigan; Gary, Indiana; Macon, Georgia; Rockford, Illinois; Rocky Mount, N.C.; and St. Louis, Missouri.

The nexus between economic challenges and fiscal stress was clear in the first round of SC2 pilot cities. In Memphis, as the city worked to develop a five year financial plan, the SC2 team worked with Mayor AC Wharton on efforts to make waterfront revitalization an anchor for new economic development. In New Orleans, as the city continued to implement the best practice of budgeting for outcomes, the SC2 team worked with Mayor Mitch Landrieu to implement a violence reduction initiative that recognized that public safety was critical to prosperity. And, in Youngstown, Ohio, the city undertook an operational efficiency study as the SC2 team worked to encourage downtown redevelopment.

SC2 pilot cities also benefitted from the placement of mid-career fellows, many who worked more directly on operational reforms – in Memphis and Youngstown, SC2 Fellows developed and implemented new performance measurement and management initiatives.

The National Resource Network is the Administration’s next investment in prevention. By working with cities to address the economic and fiscal struggles that can sometimes lead to fiscal distress if not bankruptcy, the Network will be in the front lines in efforts to prevent future Detroits.