A recent Bloomberg article focused on the city of Kalamazoo, Michigan, which like many cities has been staring at years of deficits. Often, when cities are having difficulty balancing budgets, they cut spending and/or raise taxes.
But Kalamazoo mayor Bobby Hopewell introduced a third option – ask the city’s wealthiest residents for a bailout. Kalamazoo as it turns out is home to a number of very wealthy families. The Stryker medical device company was founded in Kalamazoo after World War II. The city is also home to wealth traceable to the Upjohn pharmaceutical company.
One idea was for wealthy residents to supply the city with a one-time donation. The problem is that that would only solve the issue for one year. It doesn’t represent anything approaching a permanent solution to structural budgetary shortfalls.
Instead, a five hundred million dollar endowment has been proposed, one that would generate sufficient income to keep the city fiscally sustainable indefinitely. To get started, two philanthropists put up more than seventy million dollars. This first donation is to be accompanied by a thirty eight percent reduction in property taxes effective next year.
