BRR researchers discuss the plight of cities in the recession on PBS Newshour

A “vicious merry-go-round of bad news” –that’s the sentiment of three experts on the fiscal state of metropolitan America today after five straight years of declining city revenues.

BRR Network members Christopher Hoene and Howard Wial discussed their latest findings on the state of the nation’s cities on PBS News Hour (watch the video) on September 27.

Wial, a fellow at the Metropolitan Policy Program at the Brookings Institution, pointed to the connection between foreclosures and unemployment, especially in states like California, Nevada, where the unemployment rate, at 12.0% to 13.9%, is significantly higher than the national average of 9.1%. The Southeast, in particular Florida, is also struggling. Much of the reason for the high unemployment rates in these areas is tied to the housing boom and crash. With the boom came massive job loss in construction and related industries.

In other regions, the continued high unemployment stems from different reasons. In the Southeast outside of Florida, for example, manufacturing continues to wane mainly because, unlike in the Rust Belt,  the region did not benefit from the boost that the bailout gave to Big Auto.  The Rust Belt is currently enjoying a modest rebound to manufacturing, although it has a long way to go to dig itself out of its hole.

The high unemployment rates start a vicious cycle for metropolitan areas, whose government coffers dry up as revenue from property taxes and consumer spending declines. A new report by Christopher Hoene, director of the Center for Research and Innovation at the National League of Cities, tracks the dire situation many metro areas face.  ”If regional housing markets, unemployment, and consumer confidence struggle, city revenues will continue to lag, city leaders will face more cuts, and those decisions will act as a drag on the national economy.”

Cities, he said, will continue cutting people, cutting infrastructure, and drawing down reserves. None of these are decisions spell good news for recovery.

Increased foreclosures also contribute to a pernicious cycle, according to Dante Chinni of Patchwork Nation.  When the music stopped and housing values fell, jobs dried up and unemployment rose. Pretty soon, people can no longer afford to move because they’re stuck with a home that won’t sell or a bank account that has little wiggle room.

What cities can do to counter the spiral, Hoene said, is to connect different sectors with other parts that might be growing. In the case of foreclosures, they should map the foreclosures, map where the job loss is occurring, and then get the right people in the room and work to connect people to growing job sectors and those who need housing with affordable homes.

More detailed information is available on the PBS website.

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