Not because of pensions, or the economy, or bad leadership — though all three make it worse. Cities run out of money because of what they decided to do.
Mission determines goals. Goals determine activities. Activities drive costs. A city that has never defined the limits of its mission will keep taking on new activities, and each one becomes permanent: a staffing level, a labor commitment, a maintenance obligation, a constituency. By the time it reaches the budget, the decision that created it was made years earlier and is nearly impossible to reverse. Expanding scope takes a single vote. Contracting it takes renegotiating a contract.
That asymmetry is why the standard fixes don’t work. Better budgeting techniques, efficiency initiatives, transparency portals, community outreach, privatization — I spent much of thirty years in city government advocating for those, and they manage symptoms. Not one of them asks the question that produced the cost: should the city be doing this at all?
The alternative I call Budgeting for Scope: decide what the city is for, and let that decision govern what it does and what it spends. Underneath it is a principle most cities have quietly inverted — a city exists for its residents; its residents do not exist for the city.
I laid out the full framework in The Municipal Financial Crisis (Palgrave Macmillan, 2022). Since then I’ve spent my time putting it to work: writing weekly on current municipal fights, training and advising California’s local elected officials through the California Policy Center, developing the Municipal Finance Triage Guide now used by officials across the state, and speaking to taxpayer organizations and policy groups around the country.
If your city’s budget doesn’t add up, the budget isn’t the problem.