CBO Recommendation to Munis – Default!

You hear a lot about the states that are facing a financial wall. California, NY and Il are on top of the list. But that is a 2010 story. The 2011 story will shift toward the nations municipalities. There are 36,000 cities, towns, villages and boroughs across the land. They all are facing problems. This chart from the CBO (pdf LINK) describes the problem:

As you can see the local munis get the lions share of their revenue from three sources; direct payments from the State (30%), local property taxes (26%) and other revenues (22%). A total of nearly 80% of the muni revenue stream is now suspect.

If you are living in a hard up municipal area (who isn’t?) you know that the fees you pay for everything has increased in the last year or so. Building permits, licensing fees, transportation fees, library cards, speeding and parking tickets, you name it have all doubled. There is a limit to this. I think it has already passed. Nickel and diming residents and having the cops turned into a revenue source is just not going to fly much longer. We are at the point where if some town wants to raise the price for garbage collection they are going to run into a wall. Don’t look for this source of revenue to bail out the munis in 2011. (more)