The current economic crisis is squeezing governments as property values decline, growth stagnates, holders of properties in foreclosure choose not to pay property tax and sales tax receipts decline.  Poor fortunes flow downhill and so local governments across Minnesota will not be spared burden in the coming years.  Officials in small towns are facing a new reality where, for the foreseeable future, they will be asked to do with less.

The key question is: Can they do more with less?

We are entering a new paradigm, one that will be driven by the needs of an aging population, the constraints of a large public debt, increased mobility and strong economic challenges from around the world.  

There is a saying that when the sky is darkest, the stars shine brightest.  When things are bleak, the best among us will rise to the top and will stand out.  For cities and towns, it will be telling to see which will use this period to retool, rethink and develop a strong community vision for the future and which will simply look to St. Paul or Washington DC for their salvation? 

The ones that do the former, and successfully plan for their future, are going to head the list of stars when the economy rebounds. 

The key to success, in a word: planning.

Consider the following: 

  • Our population is aging.  We are all aware of the Social Security and Medicare funding problems.  We may not all realize that our infrastructure is aging as well.  Those great public works projects of the past are reaching the end of their life-cycle.  More retirees on fixed incomes, exploding entitlement commitments and large public debt leave a minimal amount of money for assisting our small cities.
  • We have spent nearly a trillion dollars shoring up our economy in 2008.  Indications are that another trillion in stimulus is on the way in the coming year.  This is being added to the largest national debt in history, both in real terms and as a percentage of GDP.  As the next census is about to strip even more political power from rural areas, budget choices in our capitals will force small towns to find ways to pay for more of their own infrastructure needs, a task few can currently manage.
  • From foot to horse, from steamboat to train, from car to jet and from fax to Internet, the march to the future has always increased our mobility.  Our small towns are competing for population in a world where people have more and more choices about where to live.  How does a small town attract and retain a workforce, secure investment and encourage entrepreneurs in a connected and mobile world? 
  • China and India are not going away.  Neither is the newly-connected “third world”.  These places have tasted a sip of Western affluence and, understandably, want a gulp.  They have young populations, new infrastructure and, in the case of China in particular, huge cash reserves.  Yes they have challenges, but our successful small towns will need to be able to work with and compete with their small towns.  This is the new world we live in.

Our small towns need to understand these challenges and adapt to them.  But our planning efforts cannot be done in a business-as-usual manner.  We can no longer plan for unsustainable growth, economic development that may not materialize or new infrastructure that we can’t afford to maintain.  Our small towns and rural areas can no longer blindly copy the development pattern of metropolitan suburbs and expect success.  Doing more with less means being smarter about how we spend our resources.  It means making the most of our current investments.  It means a truly small-town development model.  And, in a small town, it means constantly engaging the members of our communities to build on a common vision.

We believe that those communities that plan for this new reality will be the success stories of the next generation.  Those that do not will face stagnation or rapid decline.  In the way that budget realities have forced school district consolidation, it is likely that failed local governments will disappear, gobbled up by successful neighbors or turned back to a regional government. 

One thing that recent swings in the market have demonstrated is that our economic system, when left to its own devices, lavishly rewards those that innovate and ruthlessly punishes those that fail to adapt.  While government reacts more slowly, it is inevitable that the same principles will come to bear on our small towns.  Only time will reveal which ones successfully plan today and become our stars in the new paradigm.