Michael Lawson, a researcher for the George Mason University Fiscal Sustainability Project, provides a fiscal comparison of Baltimore and San Bernardino

1. FISCAL RESILIENCE & FISCAL CRISIS:
THE CASE STUDIES OF
BALTIMORE AND SAN BERNARDINO
Michael Lawson
Independent Researcher and Consultant
George Mason University Fiscal Sustainability Project
mlawson2003@gmail.com
202.543.3437

2. Background on GMU Fiscal
Sustainability Project
• Fiscal challenges of cities following great recession
• Granular, case-study focus of six cities
• Different state oversight, regions, structures,
intergovernmental roles
• Funded by MacArthur Foundation
• Three-person research team (plus advisors)
• My focus today: Baltimore & San Bernardino

3. Today’s Presentation
• Background & context for each city
• Both stressed, but in fundamental different fiscal
positions
• Lessons learned
• Implications for New England cities & towns

4. San Bernardino

7. Bankruptcy
• Economic shocks
• Shocks from DC and Sacramento
• Issues internal to San Bernardino
• July 2012: Month of (initial) reckoning
• Bankruptcy petition filed August 1,
2012
• Still in bankruptcy court to this day…

8. Baltimore

11. Fiscal Comparisons
San Bernardino
• Bankruptcy
• Negative fund balance
• CalPERS creditor
Baltimore
• AA- rated
• Fund Balance: 10%
• Pensions: 82% funded
Financial position does not constitute “success” for a
municipality. [Necessary, but not sufficient; output, not
outcome.]

12. Why?

13. Fundamental differences
• Come at this with humility in
observations
• Combination of factors
• Still may be additional ingredients to
the “secret sauce”

14. Charters
San Bernardino
• Exec. authority: Fragmented
• Hiring & firing complicated
• Budget: Fiefdoms
• Salary formula in charter
Baltimore
• Exec. authority: Clear, strong
• Mayor
• Budget: Bd. of Estimates
• Council can only cut budget

15. Culture of Professionalism
San Bernardino
• Turnover in manager, finance
• Lack of trust in numbers
Baltimore
• Stability in finance, budgeting
• Electeds set policy, but don’t
set financial numbers
• Bd of Estimates open; 2 other
electeds

16. Political Culture

18. Political Culture
San Bernardino

19. Political Culture
San Bernardino
• Mentioned by everyone
• Mentioned in 1981 study
• Directed at city attorney, but…
Baltimore
• Not mentioned by anyone
• Taken for granted, unless it is
bad…
• When prompted (re mayors)

20. State Role/IGR
San Bernardino
• Fragmentation, overlap
– 27% counties
– 26% municipalities
– 19% school districts
– 28% special districts
• State filed suit against SB
– CalPERS
• No emergency manager
statute in state law
Baltimore
• Consolidated, no overlap
– 24 counties (City of Baltimore
considered county)
– 96% of LocGov Spending
• State assumption
– Detention ctr; central booking
– Community college
– Light rail and bus systems
– Stadiums, port, conv. ctr.
– Partnership:Schls & HumSvcs

21. State Role/IGR
San Bernardino
• IGR: 6% of revenue
• Fiscal equalization
– Little general equalization
• Other recent state actions
– Redevelopment agency fees
– MV fees/law-enfrcmt grants
Baltimore
• IGR:27% of revenue (excl ed.)
• Fiscal equalization (general)
– Disparity Grant (floor of 75%
yield statewide)
• Highways grant
– 80% of statewide total
• Unusual alliance among Big 3
• Baltimore-rural fiscal
interests
• Gov’r w/ties to Balt,PG(since ’87)

22. Intra-local Equalization
California
• Fragmentation, overlap
– 27% counties
– 26% municipalities
– 19% school districts
– 28% special districts
Maryland
• Consolidated, no overlap
– 24 counties (City of
Baltimore considered
county)
– 96% of LocGov Spending
• In Maryland, equalization of
taxes AND services within
county first
• More fiscal room for targeting

23. QUESTIONS?
OBSERVATIONS?
DISCUSSION
Michael Lawson
Independent Researcher and Consultant
George Mason University Fiscal Sustainability Project
mlawson2003@gmail.com
202.543.3437