AT FIRST GLANCE, a new report on the financial conditions of cities across the country holds few surprises: The economic recession and frozen credit markets are hitting the nation's cities hard.
Of the nearly 400 cities responding to a National League of Cities survey, 88 percent report struggling to meet their fiscal needs. To cope, they're laying off workers, raising taxes and raising fees for certain services.
But one of the primary researchers of the study says that although those of us in Philadelphia might yawn at the news - we've been in the midst of this struggle for some time - our city is ahead of the curve in dealing with it. That's in part because the city's five-year plan forces us to look further ahead and see trouble before it hits. Many cities are just feeling the pain; we started making adjustments to the budget more than a year ago. It's unclear whether the city's foresight will translate into a early recovery; that will depend not only on the speed with which the economy turns around, but the speed with which Harrisburg votes on relief for the city by allowing the city to raise the sales tax.
And in case there are still those in Harrisburg who maintain that the city has behaved badly and now just wants a bailout, the League of Cities researcher, Christopher Hoene, had this wisdom to offer: "This is not the time for state legislators to be reducing local tax authority, and it's actually a good time to give them more. As states face their own shortfalls, the worst thing they can do is pass trouble down the stream to cities, or to restrict the authority of local municipalities."
Yesterday, while Harrisburg continued to sit on the city's ability to raise taxes, Mayor Nutter announced that the city was taking out a short-term loan from JPMorgan Chase to ease the city's cash- flow problems. That means the city can make approximately $200 million in delayed payments to vendors. That's good news, especially because those vendors include court-appointed attorneys.
But we have to wonder: Doesn't a three-month loan at 3 percent - which balloons to 8 percent if the city doesn't pay it back by Nov. 30- have the earmark of a predatory loan? At the least, it's an expensive one: The loan will cost the city more than $800,000; if it's late, it will cost more than $2 million. (JP Morgan got $25 billion in the government bank bailout, which it has paid back.)
Chalk it up to another high cost of doing business with Harrisburg.