How did the long-term perspective win out over the usual short-term political calculations? Dively attributes it to the quality of the elected officials over the years. "And who knows?" he says. "Maybe it's also some of the city's frugal Scandinavian ethic." —D.D.
Suburban Blight
In most ways, Lakewood, Colorado has little in common with Pittsburgh. For starters, it is a suburb of 144,000 people. Adjacent to Denver, the community is close to mountains, forests, and lakes. Unlike Pittsburgh, its voters are mostly conservative.
But Lakewood is facing a series of fiscal pressures that, while not on the same scale as Pittsburgh's, are proving equally painful. "I've been in office for five years, and I've had to cut the budget every year," says Steve Burkholder, now serving his second term as the city's mayor. "The first year it was the perceived fat, then it was the muscle, then the bone, and in this last year we did amputations."
The city has three main problems. The first is a very low sales tax — 2 percent. The tax accounts for about 60 percent of the city's budget, but revenues have dropped with the economic slowdown. The second is the growth of online shopping, which Burkholder estimates has cost the city $2.5 million in lost tax revenue. Finally, costs continue to rise sharply. Health-care costs are a particular strain — the government's premiums will rise between 15 and 20 percent this year.
What really puts the city in a bind, however, is Colorado's Taxpayer Bill of Rights, passed in the early 1990s. The law bars any local tax increases without a referendum and requires governments to refund money if the budget grows faster than the rate of inflation and the local economy. During a recession, this creates a quandary: the permitted budget shrinks along with the economy, but expenses don't. Lakewood has so far obtained an exemption to the refunding requirement, but in 2007, unless voters reauthorize the exemption, it may have to give back money at a time when revenues are already sinking. "We could be hit with a double whammy of a low tax rate and demands to refund money that's already been spent," says Burkholder.
Voters have rejected past efforts to increase the sales tax. This time, the mayor is launching an effort to engage the public in the budget-setting process. Throughout the year, the city will hold a series of community meetings. Says Burkholder: "We'll ask, 'What's important to you? Should we be spending more on cops, the arts, or on streets? Now, given the realities, what do you want us to do: increase taxes or cut services?' " —D.D.
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