The Real Reason Your City Has No Money

Lafayette, Louisiana, has a population of around 125,000. That makes it about the 200th largest city in the country; not really big but not really all that small either. It has a unique culture and geography, but the layout and design of the city are very ordinary American. Get outside of the core downtown and surrounding neighborhoods to visit the strip malls, big box stores and residential subdivisions and Lafayette looks like any other city you'll pass through.

I stress its unremarkable nature not to denigrate it in any way -- I love the city and I have a special fondness for the people of Lafayette -- but to help connect you, the reader, to a shared plight. Except for a small handful of North American cities -- literally five or less -- Lafayette provides an insight into why your city has no money.

Problems have solutions. Predicaments have outcomes. What is happening in Lafayette is not a problem; it's a predicament.

Along with my good friends and colleagues Joe Minicozzi and Josh McCarty of Urban 3, I was invited to work with the city of Lafayette to help them get a handle on why they could not keep up with infrastructure maintenance. Through a strange path, the city had found itself with a lawyer turned newspaper reporter -- a really sharp guy named Kevin Blanchard -- as their public works director. Questions that prior directors had found inconvenient to ask were now front and center.

Like most cities, Lafayette had the written reports detailing an enormously large backlog of infrastructure maintenance. At current spending rates, roads were going bad faster than they could be repaired. With aggressive tax increases, the rate of failure could be slowed, but not reversed. The story underground was even worse. Ironically, this news had historically been the rationale for building even more infrastructure (theory: this is a problem that we'll grow our way out of). That didn't make sense to Kevin or to the city's mayor, a guy named Joey Durel.

Joe, Josh and I interviewed all the city's department heads and key staff. We gathered as much data as we could (they had a lot). We analyzed and then mapped out all of the city's revenue streams by parcel. We then did the same for all of the city's expenses. This was the most comprehensive geographic analysis of a city's finances that I've ever seen completed. When we finished, we had a three dimensional map showing what parts of the city generated more revenue than expense (in business terms, this would be called profit) and what parts of the city generated more expense than revenue (again, in business terms, this is considered a loss).

Here's that map. In accounting terms, green equals profit and red equals loss. The higher the block goes, the larger the amount of profit/loss. If you have a sense of the basic layout of North American cities post World War II, you can figure out pretty easily what is going on here.

There are some remarkable things to note right off the top. When we added up the replacement cost of all of the city's infrastructure -- an expense we would anticipate them cumulatively experiencing roughly once a generation -- it came to $32 billion. When we added up the entire tax base of the city, all of the private wealth sustained by that infrastructure, it came to just $16 billion. This is fatal.

It's obvious to me why this is fatal, but for those of you for whom it is less clear, let me elaborate.

The median house in Lafayette costs roughly $150,000. A family living in this house would currently pay about $1,500 per year in taxes to the local government of which 10%, approximately $150, goes to maintenance of infrastructure (more is paid to the schools and regional government). A fraction of that $150 – it varies by year – is spent on actual pavement.

To maintain just the roads and drainage systems that have already been built, the family in that median house would need to have their taxes increase by $3,300 per year. That assumes no new roads are built and existing roadways are not widened or substantively improved. That is $3,300 in additional local taxes just to tread water.

"Using ratios we’ve experienced from other communities, it is likely that the total infrastructure revenue gap for that median home is closer to $8,000 per year."

That does not include underground utilities – sewer and water – or major facilities such as treatment plants, water towers and public buildings. Using ratios we’ve experienced from other communities, it is likely that the total infrastructure revenue gap for that median home is closer to $8,000 per year.

The median household income in Lafayette is $41,000. With the wealth that has been created by all this infrastructure investment, a median family living in the median house would need to have their city taxes go from $1,500 per year to $9,200 per year. To just take care of what they now have, one out of every five dollars this family makes would need to go to fixing roads, ditches and pipes. That will never happen.

Thus, Lafayette has a predicament. Infrastructure was supposed to serve them. Now they serve it.

All of the programs and incentives put in place by the federal and state governments to induce higher levels of growth by building more infrastructure has made the city of Lafayette functionally insolvent. Lafayette has collectively made more promises than it can keep and it's not even close. If they operated on accrual accounting -- where you account for your long term liabilities -- instead of a cash basis -- where you don't -- they would have been bankrupt decades ago. This is a pattern we see in every city we've examined. It is a byproduct of the American pattern of development we adopted everywhere after World War II.

There are two questions I'm commonly asked when I tell this story. The first is: how did this happen? The second: what do we do now?

The way this happened is pretty simple. At Strong Towns, we call it the Growth Ponzi Scheme. Through a combination of federal incentives, state programs and private capital, cities were able to rapidly grow by expanding horizontally. This provided the local government with the immediate revenues that come from new growth -- permit fees, utility fees, property tax increases, sales tax -- and, in exchange, the city takes on the long term responsibility of servicing and maintaining all the new infrastructure. The money comes in handy in the present while the future obligation is, well....a long time in the future.

"Humans are predisposed to highly value pleasure today and to deeply discount future pain, especially the more distant it is."

Psychologists call this temporal discounting. Humans are predisposed to highly value pleasure today and to deeply discount future pain, especially the more distant it is. It's easy today to rationalize that future expense, especially when you feel so assured that new growth will make those future people better off. This thinking is how you end up with two dollars of public infrastructure for every one dollar of private investment. This is how you spend yourself into bankruptcy.

This isn't a political, cultural or social failing. As humans, we're wired to act this way. Modernity removed most physical restraints, government removed the financial, and we did the rest.

So what do we do now? Well, we're about to create a huge pot of money at the federal level that we can spread around to try and solve this problem. Only, it's not a problem. It's a predicament; it has no solution, only outcomes.

It's a predicament that nearly every American city, with very few exceptions, finds itself in. Even if there was enough wealth and productivity to fix all of this -- and there isn't anything close to that amount -- we would be fools to spend it so unproductively.

All this infrastructure is a bad investment. America needs a different model of growth and development.

Tomorrow I'm going to show how the poor are financially propping up our cities and how, once we understand that, we can start making low risk investments that actually make us wealthier as a country while also improving our quality of life.

Read the follow-up article, "Poor Neighborhoods Make the Best Investments."

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Charles Marohn—known as "Chuck" to friends and colleagues—is the founder and president of Strong Towns. He is a professional engineer and a land use planner with decades of experience. He holds a bachelor’s degree in civil engineering and a Master of Urban and Regional Planning, both from the University of Minnesota.

Marohn is the author of Strong Towns: A Bottom-Up Revolution to Rebuild American Prosperity (Wiley, 2019). He hosts the Strong Towns Podcast and is a primary writer for Strong Towns’ web content. He has presented Strong Towns concepts in hundreds of cities and towns across North America. Planetizen named him one of the 10 Most Influential Urbanists of all time.

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Charles Marohn·January 10, 2017

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  • As a member of the Iowa City City Council, we are currently reviewing the proposed budget for Fiscal Year 2018. Today, we will be reviewing our Capital Projects Fund, which identifies projects planned over the next five years. Each project has a summary page, which at the bottom has a brief narrative describing the budget impact. Impacts appear to be limited to short-term operating expenditures, not long-term life-cycle costs. This is so even with projects that are significantly adding to our financial liabilities, not simply replacing them.

      • Ask your staff to calculate the equivalent annual cost of each project. Imagine that your city had an internal service fund that purchased, financed, maintained, and (at the end of each life-cycle) replaced all city assets and then leased those assets to the operating departments on a break-even basis. The lease payment in this situation would be the equivalent annual cost. Such an internal service fund would not change the actual cost of the infrastructure, but that cost would become much more visible--especially during budget season!

      • Remove all bureaucracy and "consulting" in these city's and you will see a tax bill drop to less than $200 per person per year. Take it from someone who worked many years in utilities and infrastructure, these things don't cost anywhere near what you think they do. If they did, then you would see only slums in other poorer cities, but fact is many cities around the world with less money actually have similar infrastructure to their "richer" cousins.

          • Minus the inevitable flood of lawsuits, of course. [See Trump's recent problem with the 'ban' on Muslim immigrants. He didn't run that through the intergovernmental impact bureaucracy and as a result, he's experiencing all sorts of problems... er, 'predicaments' regarding the implementation of that executive order. This may help to explain why he had so many lawsuits in his private sector career. That bureaucracy costs money, as does any kind of advance planning.] [Also see Flint's water supply and the associated lead poisoning that resulted from trying to financially engineer a cost-cutting solution to that predicament.]

            The poorer countries you describe are usually run by dictators who can easily put the kibosh on any legal activity, especially if it adds to the balances in their bank accounts.

            "The chief cause of problems is solutions." - Eric Sevareid

            Check out Tainter's examination of the structural reason the Roman Empire became weak enough to fall from a variety of external (barbarians, climate change) and internal (corruption, theocratic-by-way-of-early-Christian-fundamentalism) factors. His ideas are worth checking out in detail, but a nutshell explanation is here:


            The bottom line is that no great civilization can survive for long because the increase in taxation needed to fund the required infrastructure required to hold the system together itself becomes an empire killer. Add to that the biggest problem borne out of the empire's success, or what I call the "what do we do with all these bleeping people?" predicament. The Egyptians bankrupted themselves building pyramids with all those workers; the Romans had their Bread and Circuses; the Brits simply allowed the poor to die in hunger, plague and poverty (spread out around the globe as their empire was; that would be impossible in a more centralized system which is why there were no guillotines in Trafalgar Square); the Americans used their 'excess population' as a strength, building the capitalist economy with it. [That is as much of a Ponzi Scheme as any governmental program that seeks to "build their way out of the problem". Its also destroying the planet's ecosystem and worse, has a limited shelf life as technology is replacing most of the low-skilled labor and all of the unskilled labor. Capitalism, sad to say, is on life support and soon will be pushing up the daisies. Socialism isn't the cure either; if capitalism is dying then socialism is dead. Its just that neither of them know it. Once the US unemployment rate hits 50% -- an event that is not that far away -- we Americans too will join the ranks of the above named failed civilizations.]

            The one possible key to surviving this involves getting the cost of energy down to what I would call "ridiculously low prices"; perhaps 1/100th or even 1/1,000th of what it is now. But that is unlikely because of the profit motive and the unwillingness of the private sector to sacrifice the profits of the energy sector in order to allow the rest of us to continue living and even prospering. Make no mistake: if the high-water mark of western Civilization can be seen as the Apollo Moon landings in 1969, then the decline started four years later when the age of cheap gasoline ended with the Arab Oil Embargo. Oil has spiked upwards several times since then, each time taking the economy down the toilet with it. Compare the cost of buying a house back then with the cost today, and contrast that with the cost of a gallon of gas then and now. It doesn't take long looking at that (along with the drop-off-the-cliff of the inflation-adjusted average net income of the American worker from then and now) and you have the reason why we are in such obvious decline.

            If the infrastructure build-out (described in the article) is mainly for 'green' energy projects, then as the nascent robotics/A.I./Big Data/3D printing/etc. revolution unfolds, we can take advantage of it to continue along for another generation or so (tops). By then, maybe we can conjure up another fix and buy ourselves a few more decades. [But what we will do with all the people (i.e., the unskilled unemployables displaced by technology) is a different matter altogether. Do we let them starve, like the Brits? Do we have a huge welfare state build-out, like the Romans?]

            But sooner or later, we will need to design another socio-economic paradigm, and get everyone to buy into it. Good luck with that one. We can't even get the Washington elites battling each other to agree on which judges to use.

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              • Please don't confuse bureaucracy with due diligence. The two are not related in any form. You can do things in a safe manor, with smart people, the complies to international bodies of standards.

                The Flint water crisis was caused by bureaucracy. It was caused by people that did not have a vested interested in having a good job done, making the wrong decisions. I very much doubt you will see a water treatment engineer in Flint say they thought was good idea to shift budgets.

                Trump is bureaucracy. Nuff said. While he didn't talk with his other bureaucratic partners - don't think he isn't executing items he has indepth knowledge about. Likewise the same can be said about dictatorships. However infrastructure occurs in both of these out of pure necessity. Contrary to your Pol-Sci teachers learnings - society does exist, and infrastructure is commissioned without the need of government. Because unlike the government, many elements of infrastructure are a requirement for commerce and community.

                In these situations - taxation is localized. i.e. you pay your farmer for food you eat and a percentage of that ensures he can get you food as often as he can (thus dam's are built to provide water to his fields so he can grow more crops). The same thing with roading (tolls), power (supply charges) and water (pipe charges).

                While I do agree with your statement of the number being quoted is inflated due to expanded scope (data + tech + green). This can easily be reduced, and based on ROI. Which leaves the remainder of "dead wood" budget, usually paid to people who sound like they are doing the work.....but aren't. The bureaucracy and consultants typically take 50-75% of an infrastructure budget. This happens again when an investigation is done as to why things are bad (Millions was poured into Flint - yet no improvement was made, even after problems were found).

                We really need to keep it simple, look at the numbers and go "You want money for what? What is the outcome?" and drive for the outcome - unfortunately (as you stated) most leaders that are elected are not from a background where they had to actually deliver a result that was to the benefit of mankind.

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              • Would it be possible to create a colorblind friendly version of that map? Green-red can be quite hard to see - blue red would be easier on the eyes.

                • Johnny 4 years ago edited

                  My assessment of the situation is that we aren't going to address these fundamental Ponzi dynamics in a rational manner. Things will fail, people with money will migrate to more solvent places and fortify themselves against the lesser people who are left behind, and most places will simply continue to decline. That's been the American trajectory for three hundred years. Lafayette will eventually reinvent itself as a city with distinct winners and losers - exactly as it is today - except the location of the winners and losers will shift. Any other scenario is just wishful thinking.

                    • California and NYC sure seem to be too expensive for an average American to live in. And are pricing the poor out of the areas thus fortifying.

                      • Okay, something I am not understanding here is that roads typically have a lifespan of around 30 years. I do not know, but I assume that drains have a similar lifespan.

                        If replacement cost, in 2016 or whatever dollars, is $32 billion, who financed that $32 billion in the 80s and did so again in 50s?

                        Obviously some things were cheaper back then as you can more cheaply put in roads for the subdivision before the houses are built and the like, but why are replacement costs vastly higher than initial placement costs? From what little I can Google it does not look like Lafayette ever had that serious of a public works windfall. Whatever the costs of the burbs, I cannot imagine that anyone had all that much money to dump into roads in the 1950s-1980s, particularly as we would be looking at much lower productivity for all manner of things (like asphalt production).

                          • Underground infrastructure can actually last much longer than roads. We are completing numerous Asset Management Plans in Michigan, and we are finding that many underground utilities (sewers, manholes, etc.) can last over 100 years. HOWEVER, communities still have to clean and rehabilitate/repair these sewers, which still costs money, and most cities don't have the budgets to do even that. A good Asset Management Plan is a great way to communicate to voters and elected officials just how much money it takes to keep our infrastructure from failing, and every community should have one for each utility.

                            That said, replacing infrastructure in older neighborhoods is much more expensive because you have to work around all the other existing utilities while maintaining services to people in the neighborhood. This takes much longer to do and requires a lot more labor.

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                            • The city is not what are you displaying here. You are displaying the entire parish of Lafayette. Not the city. Your analysis should state this and explain how separate municipalities that do not share budgets with the City of Lafayette support your hypothesis. The affluent areas you describe are NOT IN LAFAYETTE. They are in other municipalities or unincorporated areas. The high profit, low income area you highlighted is entirely in Lafayette, includes downtown, the airport and the Evangeline Thruway corridor. I feel your analysis is highly biased and I don't think this example supports your conclusions.

                                • Yes, Lafayette has a consolidated government. I'm treating the entire consolidated government as "the city" although I realize the local terms you have would be different. The budget process is a little strange but the conclusion -- that the poor neighborhoods are subsidizing the rest of it -- is sound.

                                  There is too much stuff here to maintain and not enough tax base to do it. I wish that wasn't the reality, but it is. I'm sorry.

                                    • We were sold the concept of "Consolidate Government" as the parish was a government without an income and the City of Lafayette was a source of income with no government. I don't know who came up with that idea. But they sold it and the citizens bought it.

                                        • I don't understand how you can include municipalities with separate budgets who do not participate in the "Consolidated Government" in this. The city of Broussard does not share expenses or income with City of Lafayette.

                                            • So the city of Broussard doesn't receive services from the consolidated government either? They're basically not part of that whole thing at all?

                                              Just a non-Lafayette ST reader trying to understand the situation...

                                              How about the unincorporated areas of Lafayette parish?

                                          • I'm trying to relate the 3D map to the actual geographical map of Lafayette. At the bottom of the 3D map, there is a trail of green plots heading out of downtown. If you follow the trail down almost to the bottom-right, you reach a corner. Is that the intersection of University and US 90?

                                            If my guess is accurate, then the 3D map is a fairly small region around the downtown about 2-3 km in radius. But Lafayette is substantially larger than this. What does the rest of the map look like? An even bigger sea of red?

                                              • The map is for all of Lafayette Parish. The two big red shapes at the right of the map correspond to a section of forest north of Bayou Tortue Rd and the other one is a section of forest east of Oakbourne Country Club.

                                                  • Thanks for your help. So I guess then the very southern end of the southern trail of green represents US 90 as it bends through Broussard? I would love to see this data overlaid on a proper map.

                                                  • Have you ever played sim city 2000? It proves this point nicely...Every city ultimately fails unless it builds up. (I have not played it sence the 1990's but I thought every city employee at the administration and political level should play a simulation....See what works before throwing money away.

                                                      • quiviran 4 years ago edited

                                                        You have a Herculean task. Facts and data are so appealing, but speaking truth to nonsense is hard. I can't wait for tomorrow (Oh, wait that's later today).

                                                        Lafayette is a great town. Their story about building out fiber optic internet is epic. I think they may be proof that cities are where the action is.

                                                          • A good part of the problem is not just the horizontal growth "Ponzi scheme" (more roads, gutters, sewers, water lines, etc) need to be fixed or replaced problem, we have a number of national and international 'bubbles', propped up by other Ponzi scenarios, like predatory lending (from "cash stores", to credit cards, to student loans, where little often is done to limit how much is borrowed, because schools, colleges and universities, for profit or not, do much to push up the price of education), but we have even much more fundamental society and civilizational problems—

                                                            Due to the 'gutting' of the family (no fault divorce laws have made marriage a joke; albeit a very expensive joke when people get divorced, with little real common sense); co-habitation, which has further devalued commitment between what should otherwise be a married couple; to 'homosexual marriage', which is as much "marriage" as one can connect 'male' and 'male' connectors; or 'female' to 'female' connectors. This made up 'accomodation' attempts to legitimize what is immoral, imo, to begin with—and, imo, goes counter to nature, and nature's god.

                                                            And the concept that females can "have it all, baby" is fundamentally wrong. It reminds me of a documentary on "Rats" I watched recently on Netflix. One 'counter' to rats in the English countryside is a guy with some 20 rat terriers that come and, with human help, the despised rodents are ferreted out from their hiding places, where several terriers will all grab onto it, and stretch the rat in however many different directions as there are terriers that have teeth in it.

                                                            I've never known a professional who did whatever they did part time, and was great at it. The adage, "You can't have (keep) your cake and eat it too" here runs true. I think of the macro-economics scenario of choosing to produce either a lot of guns or a lot of butter. Purportedly, Hitler gave this option to his people once they had begun war against a good part of the rest of Europe, and beyond. And, the Biblical, "No man can serve two masters..." (which for me, a Mormon, has long been a tongue-in-cheek argument against polygyny (polygamy involving one man and several simultaneous wives—whereas today, either gender practices polygamy, legally at least, successively—several spouses, typically one after another, after another, etc) also come to mind.

                                                            The point here is, is that with women having maybe two decades in which they can usually give birth to children, we have been more and more since the mid-to-late 1960's especially, and onward, choosing, by various means, and for a multitude of reasons, to have fewer, and fewer, and fewer children. Moving marriage further and further into the future, for a woman to have a 'career' (making money), instead of the traditional mainly one major breadwinner (the husband), is still getter ever worse. With a split of maybe 60 percent women versus 40 percent men pursuing college/university degrees, there are fewer and fewer men (assuming many women don't want to marry 'beneath themselves' educationally, college going men are taking misadvantage of this situation, and choosing to "get the milk free" even longer (if not for the rest of their lives), and delaying, if not completely, avoiding to "buy the cow" (having sex with women without obligating themselves to be tied down to one woman—also known as marital monogamy)!

                                                            With close to 45% or higher children that are born in the US are now born to unwed mothers, the bastardization of the nation is to the detriment of the relatively very few children being born, both emotionally and socially.

                                                            And, with so many substance abusers in our nation, the laughable "war on drugs" has pretty much given up even any semblance of giving it the "good college try" (in stopping it). This results in more and more 'broken individuals', who are hooked on such addictive substances, that the likelihood of really reversing it with most drug users is also (and not in any funny way) laughable. Homelessness is gripping the whole nation. Salt Lake City is in the throws of trying to get homeless people off its streets, while no neighborhood wants the winos and drug addicts which make up much if not most of the population of homeless individuals, who shout, and perhaps rightfully (in one way of thinking) NIMN or NIMBY (Not In My Neighborhood/Backyard)!

                                                            Add to this dilemma, the number of gambling addicts, with only Utah and Hawaii pretty much being the only states that still outlaw all forms of gambling, But the other 48 states, and how many American Indian reservations keeping all who want a venue to exercise their right to be financially stupid and irresponsible in place. With most of the nation covered with places to gamble, one doesn't so much 'get away' to gamble, as when only Nevada alone legalized it. Now, it's pretty much impossible to 'keep away' from it, with it's near and almost ever present locality, make fleeing from temptation ever harder for gambling addicts to do.

                                                            What use to be somewhat closer to "It's A Wonderful Life" nation has dwindled and continues over time to devolve closer to a semblance of a "Pottersville", as also portrayed in that Frank Capra directed film, where pawn shops and topless dancing joints forever calls to mankind's basest desires and brings debilitating solutions which just become ongoing ever repeating dilemmas.

                                                            Now, to 'protect' our nation, standards are lowered almost monthly to keep eligible enough bodies to wear military uniforms, and make it possible for the US Government to claim or feign that we have a military ready to defend us. Prohibitions on sizes or amounts of the body covered by tattoos seems to be the latest, though seemingly only cosmetic, still indicative, imo, of the type of people we have to accept for jobs, because there's nobody else left to induce!

                                                            "Make America Great Again!" Yeah, right, in our dreams! Now it comes out that perhaps even the incoming 'Commander in Chief' may have the Russian government, a la Vladimir Putin, holding videos of sexual encounters President-Elect Donald Trump had with Russian prostitutes as recently as 2013, in Russia. While I was relieved that Hillary wasn't elected. I was just as chagrined that our top 2 choices for President were both apparent sociopaths, saying whatever is expedient, in attempts to extricate themselves from any present difficulty. The Donald may feel he can talk his way out of any dilemma. But will all the tweeting amount to little more ultimately than we will eventually fully realize that we just really elected a twit?

                                                            My point really is, is that our nation has societal rot from the bottom up. And even if our leaders were genuine paragons of purity and virtue, what they do cannot overcome what 320 million other people in the country do.

                                                            Economies can't grow without each generation having more children than the last. Some will try to say that that is itself a pyramid or "Ponzi" scheme. But, I believe, it is not. The original economist, Scotsman, Adam Smith in his epoch work, The Wealth of Nations, published in 1776, basically pointed to the fact that North America (primarily the US and Canada) would grow their way into prosperity, because their birthrate back then was roughly twice that of Europe. He was right, we did! Our population growth gave us the economies of scale to not only grow the economy, but to fix and replace infrastructure, due to the amount of population growth, with its ever increasing demand, increasing economic growth.

                                                            Unfortunately, Sir Isaac Newton's 'Law of Gravity' holds as much sway economically, due to demographics, as it does with apples, due to gravity.

                                                            It can be hard to bike up a hill. But, trying to face in the same direction as when one is biking up a hill, it is even harder to descend down a hill, when one is forever facing forward (life demands it).

                                                            One more comparative analogy—

                                                            My father-in-law (my wife is his 'Joseph', his 11th child of 12) turned 100 years old last May 5th (cinco de Mayo). About 5 years ago, he rehearsed to me a 2nd time (he had told me some years before then) how in the years of 1932, 1933, 1934, and (jumping to) 1936, those were drought years on his parents' farm near Rosebud, South Dakota. He was still a teenager, 3rd oldest child of nine; and the oldest son, helping his dad during those years. He said that those four years what they harvested in grain was but a small fraction of the amount of grain they planted as seed! In other words, they would have actually been better off if they had not planted at all those four years (for they would have had more grain than they did by planting).

                                                            Each human generation is both a harvesting (the number of children the previous generation produced); and a planting (an anticipation of the number of children the generation that has reached adulthood will produce). My generation, the 'baby boomers', gave birth, on average, to about 170 babies for every 200 of them! Hence, they were, overall, 'unfruitful'.Demographically, they went in reverse, and whereas their parents, on average, made population progress, my generation (myself excluded, to be sure), regressed (my wife and I had nine children, born from 15 pregnancies—so, six miscarriages). We've been told we made it look easy. It wasn't. But, if I had it to do over again, I would try to do pretty much the same, at least in that regard. (In our church, we sing the hymn, with the refrain, "Count your many blessings, name them one by one...", I can, and do, count my many blessings—because all nine of our children, we find and feel, are indeed blessings to us). But, at my age (I'm now 63), my father had almost twice as many grandchildren as I do then (I have 14—we had 15, with the 16th 'due' shortly—we lost a young one, not quite 4 years old, when she died this past summer due to brain cancer—but she was an especially bright blessing to all of us)! My father at 63, though, had 26 grandchildren. He and my mother had eight children, who gave them 40 biological grandchildren, and 1 more was adopted.

                                                            But, I have a niece now in her 50's, and a number of nieces and nephews in their 40's. Some are in their 30's, a few more in their 20's. Our youngest, a daughter, is the youngest of her generation, at age 16, of all of my parents' grandchildren. Nearly half of my nieces and nephews on my side of the family are likely "done" (having children). And a few more may be unable to have many, if any more/or at all. With my parents (both are long deceased), still, currently having 82 biological grandchildren living, and about 4 'others' (adopted, step, and one deceased), my children and their cousins from my side of the family have only about replaced themselves (with their spouses), if no other of their children die, that is (and that is statistically unlikely to hold). In the US, 200 adults (100 females and 100 males) typically need between 211 and 213 children just to get 200 of them that will grow all the way to adulthood).

                                                            Mormons are (supposedly) among the most fecund in American society. But, that's speaking only in 'relative' terms. We're (also) having babies at sub-replacement rates, and probably have (at least, worldwide) at sub-replacement levels for about the past quarter century (not good news)! So, our (Utah's) high birth rate compared to New Hampshire's low birth rate, is like Americans were a decade ago to the rest of the world, as described in David P. Goldman's classic article "Demographics & Depression", where he described Americans, demographically, to (then) be lepers, like virtually all the developed nations, and even along with many developing nations, but, (America) was "the leper with the most fingers left!" a kinduv praiseworthy position, but only in comparative terms. Sure, demographically, and hence, economically, the whole world is pretty much "going to hell". But our descent is perhaps slightly slower!

                                                            This is the position many, if not most, American cities and towns find themselves in. And, for the reasons I have listed above; AND, for one other. Socialism—a government sponsored Ponzi scheme, that is legal, because the government has allowed for itself, though it has banned it for all private entities, what is made illegal because it's effects are ultimately immoral, and unsustainable, because in the end, all find themselves having been scammed. So it will end up, too, despite all our wishes, and all of the claims of any and all saying otherwise. Here, demographic gravity will bring us all "back to earth", eventually, as Newton discovered with the (on the top of the head) advent of that precipitous apple!

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                                                              • Wow, what a rambling and incoherent rant. You have too much time on your hands.

                                                                  • You have too little time (and attention) to try to understand. Too narrowly focused, and we are mostly talking about symptoms, rather than what is causing them. Without a much bigger view, we are like ants trying to analyze a fallen ice cream cone. Way may get the facts right, but have little idea of its origin, or what we can and cannot do about it.

                                                                      • Incoherent? Hardly. It's very understandable for anyone who has an attention span of a serious thinking, full adult. Too narrow if a focus is akin to an aunt trying to understand a fallen ice cream cone.

                                                                          • Not only a rambling rant but the income from the LUS is never mentioned.

                                                                            • The less then zero growth rate is why the government will never stop immigrants from moving into the US. We will turn into Japan if we ever stop.

                                                                                • Agreed. In a great article written in 2009 called "Demographics & Depression", David P. Golden (aka 'Spengler') talks about how when we have sub-replacement birth rates, how that screws things up, between savers and borrowers, in an economy.

                                                                                  Socialism, what I would call a government-sponsored Ponzi scheme, as wonderful as it seems to be (for recipients) is unsustainable in the long run. The number of people paying in to those receiving has collapsed greatly since Social Security was begun in 1936.

                                                                                  Of course, MediCare, begun by LBJ, incurs about 6X the unfunded costs that Social Security does. George "W" Bush's increase of drug benefits in 2004 was a ploy to help him win re-election by pandering to retirees in Florida. For him, it worked (barely).

                                                                                  But US tax payers AND creditors have been and will fund that increase for as long as the program lasts (no small price)!

                                                                                  Bernie Madoff's Ponzi scheme was no where near as bad as these (and other) programs are, sponsored by government.

                                                                                • "Lafayette provides an insight into why your city has no money."

                                                                                  But this is impossible . . . because Lafayette has a Master Plan!

                                                                                  (Master Plan \mastər ˈplan\, noun, a program of action that looks good on paper but that no one follows when it becomes inconvenient.)

                                                                                    • A master plan is a tool that helps -- repeat, helps -- Lafayette look better and run better and have a better quality of life and image than most other industrial ghettos that pass for cities in Louisiana (see Morgan City etc) and elsewhere. Or do you just think all the good stuff in Lafayette just happens because of our Cajun charm? Try no plan and no government and see how that works.

                                                                                      • I'm a member of the City Council in the District of North Vancouver, BC, Canada. Our population is 85,000 and we carry around $2B in assets (replacement value). We are primarily a suburban, single family, 1950s auto dependent community without a real "downtown" and yet we have comprehensive asset management plans to cover 13 asset classes that are based on AUS/NZ best practices (NAMS and ISO55000). Full life-cycle cost is funded through property taxes (the primary/only source of revenue for Canadian municipalities). And yes Charles, I'm still working at pulling together the details for a blog post based on our discussion on Twitter.

                                                                                        It seems insane that a city with 1.5x the population as mine can have 16x the assets. We do have a regional government that is responsible for drinking water and sewage treatment, but if you summed up of those assets (dams, treatment plans, primary water & sewer mains, pump and lift stations) and divided it by our portion of the regional population it would only add a few $100M of assets. Am I missing something?

                                                                                          • EPIPHANY : Shutdown the evil DEA who insist marijuana has no medicinal value . Scrap the highly inaccurate Federal Drug Schedule List . End the bogus and futile drug war . Start spending tax payer money more wisely . America is in debt to China for many years of incarcerating innocent citizens .

                                                                                              • Chuck,

                                                                                                Curious what the 4 or 5 cities are that don't operate this way, in your view. I live in DC, and we are unique for many reasons. Wondering if this is one of them, though I certainly think on transit financing, we're only now catching up to the longer term obligations, yet that and our geographic constraints have perhaps saved us from falling into the horizontal growth death spiral.

                                                                                                  • I would have thought DC would be one of the 4 or 5, but then I see they show up on this list which I wouldn't think bodes well for them to be one of the 4 or 5.

                                                                                                      • That list has to be inaccurate. There are, no exaggeration, probably 12 - 16 total houses in DC on 5 or more acres, out of an inventory of 200k+. And probably 75% of those are owned/managed by an institution of some sort, so they are really more like colleges or think tanks than just a house a family lives in. The majority of the housing stock is row houses on 1/10th of an acre or less, with another large supply of mid-rise condo/apartment densely spaced along arterials and with access to Metro. My only thought is that they are using the Metropolitan Statistical Area, which would include a fair amount of horse farms, big lot McMansions, and other large lot uses that are in Maryland or Virginia, but not actually part of the District.

                                                                                                        The reason I asked if DC was one of Chuck's five cities is because so much of the District is dense housing product, or historic (and now contemporary) retail that is densely packed along street frontage with relatively little parking, and even fewer dedicated parking spaces.

                                                                                                        Still curious if anyone has additional insight.

                                                                                                        • I kept reading through the comments, and it does look like someone else ask a similar question. Here was Chuck's response, " NYC, Boston, San Francisco, Vancouver, maybe Chicago.... I'm not an expert on this scale of a place by any means so I could be very wrong but they don't seem to have the same underlying forces as a Lafayette (or even a Detroit or Memphis) where 80%+ of their infrastructure serves unproductive land use patterns."

                                                                                                        • Fabulous information! Always wondered what was happening. Are you going to tell us how/why fed or state government mandate new housing requirements? That seems to be our problem in Goleta, California.

                                                                                                            • typo: "promises than they it keep"

                                                                                                                • Phil Wilson 4 years ago edited

                                                                                                                  Federal debt. State debt. Municipal debt.

                                                                                                                  Economics may not hold the answer as much as Yeats.


                                                                                                                  Great article.

                                                                                                                    • Some municipal infrastructure like streets and sometimes stormwater are paid for out of the tax base, but other infrastructure like water, wastewater, electric, and gas are most often paid for by rates - these utilities maintain their own budgets, cash reserves, and obligations. Counting the replacement cost of infrastructure owned by rate-based enterprise utilities against the income from property taxes alone, without including rate income, will show a huge deficit like you claim. I am interested to see this analysis when including rate income.

                                                                                                                      That being said, current spending on infrastructure replacement for relatively new cities or cities that have experienced recent growth often does not look sufficient to replace all infrastructure in a timely manner. Part of this is underinvestment, but part of this is that much infrastructure is relatively new and not yet in need of replacement, so replacement spending will have to rise over time, just not right now.

                                                                                                                        • Let me suggest a metric that is imperfect but easy to calculate: the average remaining life percentage of depreciable assets. And to avoid the problem of mixing rate-based enterprise assets with assets that are used in governmental activities, I suggest looking most carefully at the governmental (non-business-type) assets.

                                                                                                                          Let's use my former employer, the City of Salem, Oregon, as an example. In its 2016 CAFR (page 66 of, the City has $593 million in depreciable assets used in governmental activities. The accumulated depreciation for these assets is $358 million. The difference between these two numbers is a book value of $235 million. Divide that book value by the total historical cost, and you find that your depreciable assets have, on average, 40 percent of their useful life remaining.

                                                                                                                          In a steady state, where assets are being replaced as their useful life ends, that ratio should be 50 percent. So, what's the difference between the target of 50 percent and Salem's actual ratio of 40 percent? In this case, the difference is $123 million. I call that the asset replacement deficit. That is the amount of one-time capital investment that would be required to get the governmental asset pool back into a steady state. After that, asset replacement can be funded at the level of annual depreciation. In Salem's case, that's $16 million per year.

                                                                                                                          Be sure not to include any non-depreciable assets (like land) in this analysis. You will get some funky numbers.

                                                                                                                          • This is an oversimplification of the issues into a monetary/fiscal mindset. The situation and its impact on the community is so much more important than the balance sheet that the accounting perspective is merely a SYMPTOM of the underlying issue and not the CAUSE of what ails us.

                                                                                                                            The notion that happiness and success (or whatever the goal is) awaits us after achieving the balanced budget is, frankly, wishful thinking. I recommend noodling on the goal. Why are we doing this? Keep asking that until we get to the core truth which is common across all communities.

                                                                                                                              • Not sure I understand your point. I don't see anywhere that Chuck is claiming that a balanced budget will necessarily create a Utopia, but it is an unassailable fact that a society cannot function if it expends more resources than it generates over the long term. That's the core problem being laid out here.

                                                                                                                                Of course there are other aspects of civic life that contribute to the happiness of citizens, but Strong Towns has always demanded that without getting our fiscal houses in order our efforts in other areas will be fruitless in the long term.