Stucknation: After the Blizzard, Let’s Look at Our Weakened Foundations

Stucknation: After the Blizzard, Let's Look at Our Weakened Foundations

By Bob Hennelly
January 3, 2011

 Even as the giant snow piles melt into memory, the inadequate response to the blizzard of 2010 presages some of the great trials ahead for many Americans, their local town halls and their state capitals.

We head into a 2011 with almost 11 million American households shackled to underwater mortgages, where what they owe the bank on their house is more than what they can hope to sell it for. That's hard to grasp in one compelling snapshot.

Underwater. Visualize the despairing aerial images from Katrina when New Orleans residents crawled to their rooftops with extended arms waving in distress as the flood water swallowed what had been their living space.

But for 2011's "underwater" households, there will be no Coast Guard helicopter to take them off their roofs. As Republicans take control of the House of Representatives and with stimulus money and home-buying tax credits expired, locals are going to be increasingly told to fend for themselves. Local and state

governments are looking at tens of billions of dollars in budget shortfalls and their revenues continue to disappoint. The underlying cracks in America's foundation will be more clearly exposed.

As the White House hypes any hint at recovery, the slide continues on Main Street where America actually lives. The Standard and Poors' Case-Shiller index of 28 American cities shows that home prices continue to fall. In places like Atlanta, Miami, and Seattle, they have hit their lowest level since the great slide started in 2006.

Last week, the Los Angeles Times reported that California's nascent housing rebound has faltered with Moody's estimating that Californians have lost a staggering $1.7 trillion dollars in equity since 2007.

As the country settles in the reality of near-ten percent unemployment, foreclosures are projected to set another record for 2011. In 2009 there were 900,000, while for 2010 the tally is expected to top 1.2 million.

For local governments this slide in real estate, the underlying asset base that is American communities, has tremendous consequence. Across the country, declining home values and rising foreclosures can mean significantly reduced property tax revenues.

Local governments are responding and cut 212,000 workers from their rolls last year. New Jersey's Star Ledger reported the local consequences during the Great Blizzard of the new austerity. In one town, public workers bracing for layoffs just did not show up. In another, a local official explained that cuts to leaf collection in the fall had further complicated snow removal.

In New York City, the new Deputy Mayor for Operations Stephen Goldsmith tried to save money by "right sizing" the management of the Department of Sanitation which handles snow removal for the Big Apple. His plan to demote 100 veteran Department of Sanitation supervisors may have backfired with Mayor Bloomberg eventually conceding the city's snow response was below the standard New Yorkers had the right to expect.

On its website, the union for the targeted sanitation managers wrote of Goldsmith's plan, "like never before, he has cut sanitation without regard to public safety at the worst time."

The supervisors are fighting their demotion in court. The Bloomberg administration insists that the proposed reorganization of the management of the Department of Sanitation along with a decision to not fill 400 positions of front-line workers did not materially impact the response, though a full investigation is planned of the entire response.

Even in more prosperous times, events like the Blizzard of 2010 tested municipal and regional systems. Now in our new age of austerity, we may find that the redundancies we took for granted are no longer in place.

January 4, 2011

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