"Our obsession with tax cuts" has led to a crumbling infrastructure

Jan 29, 2016

By now, everyone in the nation knows about Flint, the aging industrial city that was switched to water that turned out to be toxic, by an emergency manager whose main priority was to balance the books and save money.

But while this wasn’t technically a failure of infrastructure, there is no doubt that in many cities, especially older industrial towns like Flint, things like ancient water and sewer pipes, not to mention roads and bridges, are wearing out.

Today, too many towns don’t have the money to maintain them. We have aging cities all across the industrial heartland with fewer jobs and less money than they did decades ago.

Revenue sharing from the state has been repeatedly cut. Meanwhile, they have increasing “legacy costs” from things like pensions and health care benefits past politicians promised city workers when times were booming and revenues were growing.

Over the weekend I was thinking about Saginaw and Bay City, Muskegon, other places. All have aging infrastructure. Some could wind up under emergency management.

I wondered – could it be that Flint is sort of the “canary in the coal mine,” sounding a warning we all need to hear? I decided to put that question to someone in a position to know – Charles Ballard, professor of economics at Michigan State University and the author of an acclaimed book, “Michigan’s Economic Future.”

When I asked my canary question, he told me, “the short answer is yes.”

But fortunately, economists are seldom satisfied with a short answer. There are many factors in any city’s decline.

For Flint, Charley Ballard told me, it was a case of massive loss of manufacturing jobs in a very short time, in what was essentially a General Motors company town.

The jobs left, he told me; the people who could, followed them. Now, Ballard told me, “what’s left behind is a low-income population with aging infrastructure, legacy costs, and an inadequate tax base.”

It was easy for cities to commit to legacy costs – pension and retiree health care benefits – years ago, when it seemed as if things would go on expanding forever.

Perhaps the politicians who made those commitments should have been more prudent. But the real reason things are falling apart is, he told me is “our obsession with tax cuts.”

For decades, we’ve been cutting the percentage of the economy that gets collected in taxes, Ballard told me, eviscerating state and local revenues.

He noted, “if we were to raise the same percentage of our income in taxes that we raised a few decades ago, we’d have billions more a year now.”

If we had, and had invested that money wisely, “we would have excellent roads and bridges, and we would have avoided the Flint water crisis.”

Yes, we’d be paying a little more in taxes – but a whole lot less in the costs of broken axles, bankrupt cities and broken water mains. You don’t have to be an economist to know that there is no such thing as a free lunch.

Professor Ballard also said all we would need to conquer these problems is the political will to tackle infrastructure problems, which would be the common sense thing to do.

But common sense, once again, is unfortunately, not a very common thing.

Jack Lessenberry is Michigan Radio's political analyst. Views expressed in his essays are his own and do not necessarily reflect those of Michigan Radio, its management or the station licensee, The University of Michigan.