A cautionary tale

Yes, Nevada’s unemployment and foreclosure rates are higher than those of the Great Lakes State. But when it comes to government budget woes, Michigan has us beat by a mile. And that’s saying something, considering the forecasts of fiscal catastrophe surrounding the Nevada Legislature.

A long list of Michigan municipalities must decide by March whether to go into debt to meet their obligations or default and move toward Chapter 9 bankruptcy. Free-falling property tax collections are the primary culprit, but the cities are bottoming out at the same time because Michigan’s federal stimulus dollars have run dry.

The brutal realities that were postponed by Washington’s public-sector bailout finally have arrived.

Gov.-elect Rick Snyder says hundreds of Michigan jurisdictions could collapse in the next three to five years because of declining revenues and steep salary and pension burdens. Gov. Jennifer Granholm has declared financial emergencies in four Michigan cities in the past two years. The state Department of Treasury’s local government watch list has 68 stressed entities tagged. And the state government, which has final say on whether a municipality can file Chapter 9, already has some cities pleading for bankruptcy approval.

This is a cautionary tale for Nevada’s governments, which took stimulus handouts and moved slowly to prepare their houses for what some economists call “the new normal.”

It’s encouraging that Clark County municipalities are cutting payrolls and ending the practice of handing out generous annual pay raises to unionized workers. Gov.-elect Brian Sandoval and some lawmakers have made it clear they want to move future public-sector hires out of the state’s troubled pension system. Good.

But if the 2011 Legislature punts on the reforms needed to put Nevada governments on a path to sustainability, it won’t be long before our glass is empty — like Michigan’s.