A New Approach to Saving Distressed Cities: De-municipalization

Having marked 10 years since the end of the great recession, municipal insolvency has receded as a leading focus of urban policymakers. Nonetheless, the same structural weaknesses that led to a surge in municipal bankruptcies continue to persist. In the Rust Belt and elsewhere, municipal services remain caught between an impoverished tax base and burdensome legacy costs relating to debt and retirement benefits.

In the coming years, we’re going to need to rethink the relationship between state and local governments if we want to reckon honestly with the challenge of municipal distress. States will need to take a more forthright role to guarantee basic service quality for residents of chronically poor cities. In a new report for the Manhattan Institute, I explore an idea I call “de-municipalization.” Instead of taking over an entire city on an emergency basis, states, or sometimes counties, should assume control of a major city department, and on a presumptively permanent basis.