Flint Balances Books at Cost of Services Citizens Need

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http://www.bloomberg.com/news/2013-03-27/flint-balances-books-at-cost-of-services-citizens-need.html

After firing 20 percent of its workers, doubling water rates and outsourcing trash collection, Flint, Michigan, has a balanced budget. It’s also approaching the point at which it can’t function as a city.

That’s the assessment of Edward Kurtz, its emergency manager. Without reliable revenue to replace dwindling property and income taxes and state funding, the birthplace of General Motors Co. (GM) won’t be able to support its citizens, even if its books are square, Kurtz said.

As state-appointed overseer Kevyn Orr takes control of near-bankrupt Detroit, the experience of Flint shows spending can be made to match revenue. Yet merely making the numbers work may not be enough in cities where population and revenue shriveled with the closing of auto plants.

“How many more employees can we lay off and still provide the basic services?” Kurtz asked in an interview in his office at Flint City Hall. “We can’t just keep putting it on the backs of the people who live in the city. Pretty soon, we won’t have anybody left to tax.”

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