Bankruptcy. The city of Harrisburg PA went bust early October, debt, largely centered around a very expensive incinerator project forced the move. It is the biggest municipal bankruptcy since 2008, but not the only one in recent time to change the financial course of a city.

The financial woes that have come in recent times to the cities and towns across the country circle above, like turkey vultures waiting for the last breath to pass out of the checkbooks of the municipalities below. There is little chance your town has not seen some ill effect from the downturn of the economy and the popping of the great real estate and development balloon that fell to earth.

When once it was the latest and greatest for local government to bend far over backwards to offer up incentives or infrastructure to any plan that would “grow” the town, now the attention turns to how to pay. Take the extension of West Olympian Drive into the Clearview development off  North Mattis Ave. You may as well take it, it is barely used. That part of the road and the traffic control devices hit the City of Champaign for 2 million plus.  The tax revenue from the big projects that were advertized to begin right away would help pay off the debt incurred for the work. Years later, no project yet, but the bills are due. Cuts were made else ware, to lower your credit rating would be a terrible thing. To lower your credibility rating seems to be less important.

All things debt related do not come from unused projects, some things are built, used and occupied, so the picture should be better, the revenue coming in not going out. In a good situation this is the case, but the downside of having the perception of lots of room to grow is the recipe for a stew less tasty for local revenue. The further away from the services and utilities you go the higher the cost to get them to that new project, each mile, even each yard can run up an amazing pile of money, and as in the case of Olympian Drive, the cost of a simple road can be expensive, utilized or not. That funding has to come from someplace, and if the revenue income from the new area comes up short on payback, the funds get shifted from some other part of town.

So what, the center has roads and water and sewer, you say, well yes they do, but like your house or vehicle, they have a cost to upgrade and maintain as well. That cost may be less, but as you balance out the lower income producing areas with the higher, you are left with just so much to play with and priorities have to shift. Only recently has the focus shifted back to what we can really afford to do. And that new found focus seems to not be because the light went on and better planning became the smarter way to grow. It happened because of debt.

You shift your day to day financial attentions to what needs it most, what do you have, and how do you prioritize your available money. Local government has at last by force of debt had to make the same connections you do, at least for now. The downside to lower revenue is the quest for more of it. Here the difference between you and I and the municipalities appear. We have some limit to income, you can only work so many hours, defer so many projects; stop eating out so much. The town can be more creative.

One contentious way to expand revenue with as little outlay as possible is annexation. Careful annexation of some of the fringe areas around a town can bring in new revenue with low outlay, if you grab the right part of the unincorporated territory that is.  Look around for development not in the city or town that already has water, sewers, roads, and you are looking at a ripe plum for annexation. That can come willingly or by force, and forced annexation can make for many hours of debate, with the possibility of even more revenue generation for the local attorneys.

So what happens next for a town like Harrisburg PA? Well they are going to have to deal with a pretty poor credit score, living within their means for a while, and sitting out on those pies in the sky proposals for more projects. Are they doomed? As long as there is debt to move around, legal filings to generate, and financial too and fro to manage what money there is, there will be lawyers, CPAs, and financial advisers all billing hours, the economy rolls on, just down a different road.