We have entered a transformative era, former Senator Chuck Hagel and numerous local officials told this month’s National League of Cities conference in Denver. Senator Hagel described the three earlier eras as: (1) the post-World War II era with its new world order and new economy; (2) 1989-2001, when Eastern Europe joined NATO and the tech boom ignited; and (3) the post-9/11 era, with massive effects on travel, the economy, telecommunications, and security.
The current transformative era will define a new world order and will affect all towns, regardless of location. Some nations will adapt more quickly than others. Although there is apparent gridlock at the national level in the U.S., Senator Hagel noted that innovation comes at the local and state level. “It is at the local level where people are forced to come together to exchange ideas and make the system work,” he said.
Senator Hagel stressed the urgency of the leadership challenges to forge a new direction. Without action, “There is a risk that young people may lose confidence in our institutions, structures, and leaders. If that happens, we may have a problem we cannot fix.”
Denver Mayor (and Colorado governor-elect) John Hickenlooper predicted that “those who have learned to collaborate will prevail.” He deserves bragging rights as the Denver region has built strong relationships among some 32 cities, all of which recently agreed to a tax increase to build 192 miles of rail to connect their communities.
While NLC President Ron Loveridge (mayor of Riverside, CA) agreed that local governments are leaders in innovation, he pointed out the need for federal investments in such national priorities as transportation infrastructure to support economic development. He emphasized that federal immigration reform is also critical for growth and economic security.
How can we finance local government and promote healthier, more sustainable communities? Local officials want flexibility from state governments to restructure revenue systems or to provide services through contracting with other local governments or the private sector. The CityFutures Panel on Public Finance saw shared services, contracting out, contracting in, and selling capacity to smaller local governments as promising strategies.
Public sector compensation is another hot topic in local government finance. Kim Rueben, senior fellow of the Urban Institute, talked about how early retirements and layoffs can lead to increases in pension costs. “Often the least senior staff are let go,” she pointed out. “Then you may need to pay more in overtime to those more highly compensated employees who remain, which feeds into pension costs.”
It’s a reminder that there are no easy answers and wise leadership is needed now more than ever.