Governing the Broke City: Fiscal Crisis and the Remaking of Urban Governance

On July 18, 2013, the city of Detroit filed for the largest municipal bankruptcy in U.S. history. Despite Detroit’s apparently extreme demographic, economic, and fiscal challenges, the city has been deployed as both a model of crisis response and as a warning of imminent fiscal distress for all U.S. cities. I argue that Detroit is an important site where the narrative of widespread urban fiscal crisis is constituted. This dissertation examines the dominant narratives of urban fiscal crisis and the implementation of austerity budgets and restructured governance in U.S. cities in the wake of the Great Recession. Using data from the Census Annual Survey of Local Government Finances, city budget documents, ratings agency comments, news articles, and public speeches by local officials, I describe both the national emergence of urban fiscal crisis from 2007-2013 and four local case histories: Detroit, Dallas, Philadelphia, and San Jose. I find that the same themes characterizing Detroit’s crisis are reflected in many other American cities: ratings downgrades, high-risk debt instruments, reduced autonomy vis a vis state governments, restructuring obligations to public employees, expanded privatization of government goods and services, exhortations to adapt to a “new” economy, and the handing over of financial management to unelected experts. These policies are justified by a common narrative of urban fiscal crisis that has become “common sense:” a taken-for-granted explanation of widespread urban fiscal crisis that blames government overreach, municipal fiscal irresponsibility, excessive public employee compensation, and a “new normal” of scarcity and economic volatility. Through the reproduction of this common sense by local officials, austerity and external fiscal discipline are framed as the only alternatives to financial emergency. I argue that the current wave of urban fiscal crisis contrasts with earlier periods of crisis in several important ways: (a) the scale and breadth of deep crisis after years of disinvestment and evisceration of the public sector; (b) the promotion of fiscal discipline as general governance, pushed by financial institutions, budget “experts,” and state legislatures; (c) the framing of cities as isolated fiscal entities that must practice “individual responsibility” and be held subject to the same consequences as private actors in financial markets. Finally, unlike the crises of the 1970s and 1980s, which were closely associated with the abandonment of people and capital from the central city, and an accompanying discourse of inner city crime and poverty, the current narratives of fiscal crisis must be understood in the context of a new political dynamic of city revitalization, inner city wealth, and suburban decline—along with growing spatial inequality.My work is situated within three empirical and theoretical engagements that cut across urban planning, economic geography, and political science: (1) the politics of public budgeting, in particular the politics of collective consumption, tax equity, and retrenchment; (2) the embedding of neoliberal logics of market governance in urban politics, particularly through the circulation of narratives and policy models; and (3) the financialization of urban policy, and the role of political and economic context in shaping the relationship between cities and circuits of financial capital. My project demonstrates the fertility of city budgeting as a terrain for studying broad shifts in political expectations and the relationship between public finance and urban democracy