Inflationomics

Municipal Woes

Cities across the country are experiencing more difficulty making ends meet. Consider Vallejo, CA, Detroit, MI, and Harrisburg, PA. Some people believe this difficulty is because of rising prices. Others say it is due to declining revenues. Perhaps there is another explanation—more government regulation.

Take Mercer, PA, for example; not long ago, the city council passed an ordinance requiring residents to use the city-approved garbage service to remove trash. It doesn’t matter if you dispose of your garbage by taking it to work or combining it with your neighbor’s garbage. Now you must pay for garbage service, whether you use it, or not…whether you want it, or not. OK, so it’s not an expense to the city government (who knows; they may even get a kick-back from the monopoly-granted garbage service), but it is an expense for the residents. What other bills will they be unable to pay with this added burden? How many residents will default on their taxes, now that they must pay more for garbage service?

More recently, Mercer passed an ordinance requiring building sellers to have the sewer line inspected from their building to the city’s sewer line before the sale can be consummated. If the line is clear, fine, the sale goes through. If the line isn’t clear, the seller must pay to have the line cleared. Generally, a backhoe operator must come in, dig up the line, repair it, refill the ditch, and repave the street where the sewer line meets the city’s line (which runs down the middle of the street). Depending on which service is employed, this could easily run into thousands of dollars…and that doesn’t count the costs associated with delayed closing dates—bank loan approval windows, additional attorney fees, and possible re-appraisal fees, to name a few. And what if the sales price of the building (less any mortgage payoff and closing costs) doesn’t cover the cost of the sewer line repair? Then the expense has to be covered by the property seller. And what if the seller is a destitute widow? I guess bankruptcy is always an option.

The bottom line is that government rules, regulations, and taxes on all levels—federal, state, and local—are choking individuals and businesses. And when individuals and businesses do poorly, so do the municipalities in which those individuals and businesses reside. In time, the costs of complying with the various government requirements (whether they are imposed on the cities or their citizens) will bankrupt more than just a few cities across the country. They will affect us all.

Robert Jackson Smith

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