Lauderdale Lakes cannot balance its budget without aid, though it's still unclear how this aid will take shape. In November, the Juice reported that the city was behind on its payments to the Broward County Sheriff's Office, and last week, the Sun-Sentinel reported that the city is "teetering on the brink of financial ruin."
It seems Lauderdale Lakes' stark financial woes are part of a bigger trend -- a national pattern of cities strapped with pension pay-outs and expensive day-to-day operations while revenue from property taxes has taken a plunge with the recession and its sidekick, the housing crisis.
An article titled Broke Town, U.S.A. in this week's New York Times Magazine
details how cities across the nation are reeling to offset lost revenue
with budget cuts. Class sizes are increasing and police forces are
thinning. The result of many cities' inability to independently balance their budgets is a myriad of solutions, all accompanied by
subsequent problems. For example, cities can go into bankruptcy -- yet they must
continue to provide basic service and eventually pay back their debt. In
May 2008, Vallejo, California, took this route and shrunk it's police
force while eliminating financing for the local museum, symphony, and
senior center.
For Lauderdale Lakes, solutions could include the
state taking control of the city's finances and administering severe
budget cuts or the merging of Lauderdale Lakes with another city,
according to the Sentinel, which cited a report by Lauderdale Lakes' city manager, Anita Taylor.
The Times
article also notes that historically low-risk muni bonds ("issued by
state and local governments, as well as agencies like hospitals, with
the interest going to bondholders tax-free") could back-fire on
investors if the bonds were to default. In 2008, a record 166 issues
defaulted, totaling $8.5 billion, a relatively small though not
insignificant amount, according to the Times. Most were Florida
land development projects by which builders financed services to
would-be housing developments left unfinished when the housing bubble
burst. Enter: Cities like Lauderdale Lakes.
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