ON-Lion Letter
Detroit emergency manager Kevyn Orr is struggling to keep the city afloat under the weight of a $20 billion debt load.  This provides yet another jarring reminder that, while default will likely remain rare among the 90,000 local governments in America, states must prepare for fiscal distress to occur more frequently than they have in the past.

In a July report from the Manhattan Institute for Policy Research's Center for State and Local Leadership, Defeating Fiscal Distress:  A State Responsibility, Stephen Eide contends that states cannot stand idly by.  New policy solutions at the state level are necessary to anticipate, prevent, and manage distress.  Cities need better fiscal policymaking, particularly with regard to personnel spending, since salaries and benefits dominate cities' budgets.

Eide is a senior fellow at the Manhattan Institute's Center for State and Local Leadership.  He edits PublicSectorInc.org, a project of the Manhattan Institute, and is also a contributor to the site.

According to Eide, there are four possible approaches to preventing and managing fiscal distress:  mandate relief, oversight, intervention, and bankruptcy.  Intervention and oversight should take the lead. 

The Lynde and Harry Bradley Foundation in Milwaukee substantially supports the Manhattan Institute's Center for State and Local Leadership.
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