How cities can get out of their financial bind

Gar Alperovitz, Progressive - Cities are financially strapped today, but many are adopting innovative strategies that offer much promise.

From Lowell, Mass., to Berkeley, Calif., cities have discovered they can make better use of the millions of municipal dollars that temporarily sit in bank accounts. They do this by choosing where to place deposits based on banks’ willingness to relend those dollars to meet local community development goals. This stimulates local economic development without placing new burdens on taxpayers.

Direct city ownership of land and businesses is another successful approach. Republican and Democratic mayors alike are involved in efforts ranging from land development to Internet and Wi-Fi services. In many cities, profits from municipally owned electric utilities also help finance other services and thus reduce the tax burden.

In Los Angeles, for example, the Department of Power and Water contributes about $190 million per year to the city’s revenues.

Still other cities have created new businesses to promote local economic development. Hundreds of municipalities, for instance, generate revenues through landfill gas recovery, turning the greenhouse gas methane (a byproduct of waste storage) into energy. Others have established programs to make equity investments in local firms and share in their success. San Diego, for instance, has invested $2.5 million in an “emerging technology” fund targeting small businesses in low-income communities.

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