A Mayor Discusses Fiscal Challenges Cities Face During Pandemic

June 23, 2020 Updated: June 24, 2020

IRVINE, Calif.⁠—Laurie Davies, the mayor of Laguna Niguel, California, said many people in her city don’t know who she is, and that’s a good thing.

“If the city wasn’t doing well, you’d know my name. You’d know what kind of car I drive. You’d probably know my dog’s name,” Davies told The Epoch Times.

Many cities are struggling to keep their books balanced amid pandemic budget impacts, while some that were already struggling could face bankruptcy. El Cerrito in Northern California is one of them, having been ranked No. 7 last in October on California State Auditor Elaine Howle’s list of California cities facing fiscal challenges.

 

Epoch Times Photo
Laurie Davies, mayor of Laguna Niguel, in Orange County, Calif. (Courtesy of Laurie Davies)

Davies explained some of the factors that cause a city to go bankrupt and the effect that bankruptcy has on a city’s citizens. Cities rely largely on property and sales taxes, so while stores were closed, that hurt not only those businesses, but also create havoc for city budgets.

Yet that shouldn’t be enough to bankrupt a well-run city, Davies said. For example, she’s confident Anaheim can recover from the slump in tourism due to Disneyland being closed during the lockdown.

Bankruptcy builds up over time, Davies said. And starting early on solutions makes a difference.

“Are cities being fiscally responsible when they start getting into recession? Are they making the cuts that they need to from the beginning?

“You can tell a city’s not doing well when you have a changeover in staff, when you have upheaval politically, you’re having problems with audits … and when you’re seeing leadership changeover as well,” Davies said.

When bankruptcy does happen, it erodes trust between people and their leadership, she said. Citizens pay their taxes and trust that money is being well-managed. Many people leave who can afford to leave a city at that point.

“No. 1, services start getting cut. It could be street cleaning⁠—something as basic as that, something that they count on all the time. You’re going to see businesses leaving, and that’s huge,” Davies said. “You start seeing empty storefronts, and you see foreclosure signs on lawns. You’re seeing cuts at school.”

Cuts start with fairs and festivals⁠, similarly to when an individual facing bankruptcy pares entertainment spending. Next might be capital improvement projects⁠—plans for a new community center and the like. Health and safety would be last, she said.

Attracting and keeping businesses is always a priority for cities, she said. And she feels some legislation in California, such as Proposition 47, has made it more difficult for businesses statewide.

One of the effects of Proposition 47, which was approved by voters in 2014, was to make the theft of goods worth $950 or less a misdemeanor instead of a felony. Many have said a dramatic increase in theft has been the result.

Davies says that because people are very busy, many remain unaware of the nuances and consequences of ballot measures. June 25 is the deadline for measures to make it onto this year’s November ballot in California. She works to educate people about those measures.

“I’m not going to tell people how to vote. But what I’m going to do is give them the information and tell them how that’s going to affect their pocketbook, how it’s going to affect the safety of their family, and they can make a decision.”