Hacker News Reader

Comment by scoofy | Hacker News Reader

When you are looking at your city budget... you're probably looking at cash-based accounting:

https://www.investopedia.com/terms/c/cashaccounting.asp

This looks at current costs. The school is a cost every year, so every year that cost shows up on the budget. The problem is that road/water/sewer maintenance often doesn't show up on these budgets because these systems are usually built all at once. Because of this they usually also need to be replaced all at once. To see those costs before they happen, you need to use accrual accounting:

https://www.investopedia.com/terms/a/accrualaccounting.asp

The entire message from Strong Towns is exactly that because cities often use cash accounting instead of accrual accounting in their budgetary processes these lingering issues of deferred maintenance don't show up until they do, and when they do, those costs will simply be too large for the city to cover without very politically unpopular interventions.

View on HN

Capital improvements don't need to be paid all at once; that's what financing is for. And debt service does appear on budgets. In any case, why are we to believe that e.g. $1B in maintenance that's been deferred for decades is "the" problem when the school budget is $500M/year?

You’re making an argument about school budgets being too high. That’s fine. I’m arguing that, our school budgets are set, in large part, by our available resources. Viewing our resources from a long run perspective helps us set our current budgets.

If we cut the school budget only when we need to repave roads, we are playing fast and loose with our children’s future. When we set our budgets to be sustainable, we don’t rug pull parents who are trying to build a life in our cities.

I'm not even saying school budgets are necessarily too high. I'm just saying that if someone is claiming that what amounts to 5-10% of the budget is why cities go bankrupt, and that's why they need to entirely reshape how they develop to fit some idyllic vision of a pedestrian city, then I'm going to go ahead and doubt their analysis.

Like I'm happy that my (suburban) city requires new developments to connect to a city-wide bike trail network. That's great. I just don't think Strong Towns/Not Just Bikes presents a realistic mental model of the world. They seem to clearly be pushing for a specific vision regardless of facts.

I'm not sure I understand your argument. You can defer maintenance but school, police, firefighter, etc spending is constant. If your infrastructure is in trouble and your budget can't pay for the maintenance, you can limit the costs to 5% or 10% of the budget, but your infrastructure will continue decaying.

Los Angeles has about 7500 miles of roads. At a reasonable cost of $5 million per mile that is 37.5 billion USD. Assuming a lifespan of 35 years, that is basically a billion USD per year spent on servicing road infrastructure costs. If they don't spend that billion every year or put it aside for future repairs, their road infrastructure is going to decay. It might not sound like much in comparison to the full budget, but since the road network is the largest man made structure in the city, it will affect everyone and be the most noticeable failure on part of the government. Lack of police or fire fighting can show up in the form of stochastic damage that doesn't necessarily impact every citizen directly.

Sure, if you treat all other things as impossible to tweak except the thing you want to argue is the problem, I guess. But taking a quick look at the city budget, I see they spent $200M on overtime for police. So there's a place where they could save like $70M with no change to service with correct staffing? I'm sure there are other places where they are not currently 100% efficient. Or, since they have ~4M residents in the city, they could raise taxes by $250/person-year. That doesn't sound unsustainable to me. Certainly not a "suburbs are a fundamentally broken model" level problem.

Lots of suburban cities in the US are really nice, well run places. LA even as an example of a poorly run area doesn't actually seem to be in much of a financial pickle.

The point is

> you can limit the costs to 5% or 10% of the budget, but your infrastructure will continue decaying

Is just confused. The $1B/year you came up with as sufficient is ~7% of the LA city budget (~$14B), and that's excluding major expenses like schools since that's the county budget. If you look more holistically at just "what's the local government spending", the amount you say is needed to properly maintain the roads is more like 3-4%. Roads are just not a financial problem. Strongtowns guy just doesn't like them.

Overtime for police can often be largely attributed to special events or occasions; for example, the city might have an entirely correct amount of officers for most of the year, but then during superbowl, presidential visits, Fourth of July parties, Pride, etc. They have a much higher need for patrol units, escorts, traffic management, etc. for those denser areas with more going on. They can't simply transfer officers around because that would leave other areas of the city under-patrolled, which runs the risk of unacceptably higher response times.

As a result, officers that worked Saturday through Thursday might also come in for a shift on Friday/Saturday, or might work a longer shift or split shift that day.

So the problem might not be that the police force needs 30% more staffing, but that the police force needs 80% more staffing on extremely rare occasions.

This is how lobby groups in general operate. They have settled on a solution and work backward from there to develop a problem that only their solution can fix and if other citizens and voters don't like it, they are the problem (NIMBY, greedy, selfish, populism, etc).

Just a note about police overtime: The correct amount of overtime for a union employee is not zero. Paying overtime for a few weeks each year to cover vacation can absolutely be cheaper than funding a pension and other benefits for several decades.

That’s absolutely untrue. The only reason companies track depreciation as they do is because it allows them to defer taxation. Public works projects are not paid out of current cash.

Strong Towns makes good arguments about certain things and are critical in a reasonable way of how civil engineering organizations rate the need for more civil engineering works. But the budget discussion makes zero sense.

The biggest expenses for county, city, town, village government are: schools, police & fire, Medicaid share in states that do that, and employee retirement and health. A small/midsize city spends 60% of its budget on police.

Capital projects are capitalized with bonds. Governments have the lowest bond expenses due to tax exemptions. Roadwork is not done in a cash basis. It’s bonded for 10-30 years depending on the job.

Yes, the problem is that our cities are already leveraged up to their eyeballs. At some point, the actual humans buying those bonds start becoming skeptical of the city’s ability to pay them back.

LA currently has about a billion dollars of outstanding general obligation bonds (edit: but that does not include all their future liabilities). They're still rated AA, but I presume that is because the credit writing agencies understand how many untapped revenue streams LA has, but again, those will require unpalatable political change. You can’t keep refinancing forever.

Philadelphia, Miami, and Chicago are getting close to junk bond status, and when that happens, the option to refinance starts evaporating very quickly.

Wikipedia says the GDP of the LA metro is ~1.5T. I think they could handle 1B in bonds. If they choose not to, it's not because it's some impossibility. Certainly not because roads are impossibly expensive.

I said general obligation bonds, not general liabilities. These technically are what makes this discussion so difficult.

My point is that much of what the city can tax has little to do with the city's GDP. Either the landscape of the city will have to change or the current taxation paradigm will have to change.

What they can tax does have to do with the GDP though. If they have a 1B deficit, they need to somehow tax <0.1% of activity (or cut services), whether through property tax, income tax, sales tax, corporate tax, or some other scheme. What they don't need to do is radically increase density, and since almost all of the costs scale with population, not area, density wouldn't even help that much (or might hurt if it leads to a lower percentage of net contributors).

Again, putting $1B in some perspective, the LA Unified School District budget (which is county-level, so not directly comparable to the city, but anyway) is just under $19B. Maybe someone else can ballpark how much of that is associated to the city. Or look the other things that scale with population: police, medical, waste, social programs, etc.

Again, they have $1B in the current deficit. The have $1B in outstanding bonds. They have myriad other outstanding obligations that won't show up on the balance sheet for 20+ years.

Strong Towns wrote an entire piece on this: https://www.strongtowns.org/journal/2025-10-27-ground-zero-l...

Okay, but relative to their resources, that's nothing. So they can just pay for those things. It's like worrying about a water heater replacement when you make well into six figures. At a macro level, it is obvious that the suburban model itself is not somehow financially unsustainable.

The city budget is $14B. So they need to make a ~7% adjustment somehow, which amounts to less than a 1% tweak to the local economy. That's not a broken system. It's not a ponzi scheme. It just means they should pay their bills and maybe reduce some waste. You yourself said it's trivial for residents to afford to just pay for the deficit.

LA County has a bigger economy than many European countries, and would displace Illinois by GDP if it were a state.

LA is fine.

I also think LA will be fine in the long run, I just think that their tax structure will force significant changes. The tax base is able to cover the cities liabilities, it's just that the residents don't want to pay those extra taxes, and don't want to change in ways that let other people pay them.

The city has a billion dollar deficit right now. Trivial for residents to afford ($83 per person), but difficult to actually implement politically.

So you get 40 years of "sewers cost us almost nothing to maintain woo" and then five years of "sewer maintenance is costing us hundreds of millions of dollars this year".

Reply on news.ycombinator.com