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Nation & World

Big budget problems

Small cities cope with lack of funds

PELICAN BAY, Texas – Bart Scarbrough casts a line into the brownish-green water of Eagle Mountain Lake and, in four words, sums up why he moved to Pelican Bay two years ago.

“Fishing and cheap rent,” explained the former oil field worker, who spent a recent afternoon sitting shirtless, soaking up the spring sun on the city’s lone pier, which extends about 250 feet into the water. “I lost my home to foreclosure. This is about the only place I could find something to rent that I can afford.”

North Texas is a bustling region of 6 million people, but nestled in its nooks and crannies are numerous hamlets such as Pelican Bay – population 1,583, according to a census estimate. These places are often a bit away from the nearest highway, and people are drawn to them by a rural feel, an escape from the rat race.

But residents of these little cities often discover that life is anything but simple.

A glance at property tax rates for a few tiny cities in North Texas shows that residents often pay as much as or more than their brethren in larger cities but receive far fewer services.

Streets are ravaged by potholes. Parks are unkempt. Code enforcement is spotty. Round-the-clock police protection can be lacking.

Pelican Bay residents recently learned that the city’s general fund balance is extremely low – $85,000 by the most recent estimate. The fiscal crunch has led to accusations of mismanagement among its elected leaders and has raised serious questions about whether the city can continue to pay its tiny workforce, including two full-time police officers and six other part-timers and reservists.

Pelican Bay isn’t alone. With the economy struggling and housing prices at a generational low, many cities are flirting with financial ruin. The recent bankruptcy filing of Harrisburg, Pa., drew headlines, but experts say insolvency is more common among much tinier cities with limited tax bases to produce revenue.

So why do these cities exist, and how do they survive?

“I think these small cities don’t want to be part of larger cities, like Fort Worth. They incorporate to avoid that,” Roanoke, Texas, Mayor Scooter Gierisch said.

In 2007, Roanoke voters agreed to consolidate with Marshall Creek, a town of 430 residents that went bankrupt.

“They were sandwiched between Roanoke and Trophy Club and didn’t want to be part of either community,” Gierisch said. “But then things happened, and they reconsidered their decision. They were in bankruptcy and their water bills were four times what Roanoke’s was, and the property taxes were crazy for mobile homes.

“Now, they’re getting drainage, streets, a water system. When something like that comes about … it’s about what is the right thing to do, because we had a community of individuals that were suffering.”

It’s a nationwide problem with no easy solutions, said James Brooks, a program director at the National League of Cities in Washington.

“The Great Recession that ultimately ended in 2011 affected nearly every city in America in some form or fashion,” Brooks said. “A lot of cities are trimming the costs of services with volunteers, everything from adopt-a-park programs to more elaborate things like having residents cut the grass along median strips and water trees.”

So what can a city do if it’s low on funds?

In Pelican Bay, with only a welding shop and one convenience store providing sales tax revenue, city leaders depend mostly on property owners to contribute revenue to pay the city’s bills.

But raising property taxes isn’t much of an option. More than a third of Pelican Bay households are renters, many residences are either manufactured or mobile homes, and the property tax rate of nearly 90 cents per $100 of assessed value is one of the highest in Tarrant County.

One option is to increase the collection of fees for items such as code violations and driving offenses. Several residents said the city has commonly written more citations to raise revenue.

“It depends on who’s in office, what laws you have to obey,” said Michelle Cato, 28, who has lived in Pelican Bay since 1997.

Cato lives in a mobile home on Gale Drive, along with her husband, Dean, three young children and a puppy named Peanut.

“Right now, they’ve given up on code enforcement, but they’re cracking down on (unleashed) animals — but just dogs, not cats.”

Despite the inconsistent enforcement, Dean Cato said, he and his neighbors are generally happy living in Pelican Bay.

Cato, who installs swimming pools, said that neighbors tend to get along well and that the city provides an escape from more urbanized areas a few miles away. Mostly, Pelican Bay residents want to lead a country lifestyle, pay their bills and be left alone.

Still, the most common complaint is that streets are so full of potholes that they resemble slices of Swiss cheese and that many streets also lack signs.

“You won’t believe how many people stop and ask us directions because there are no street signs,” Dean Cato said.

Many U.S. cities have gotten creative in their quest to find new funding sources or cut the cost of services.

At the most basic level, perhaps the best thing that leaders of small cities can do is open a dialogue with residents and find out what services are most important, said Brooks, of the National League of Cities. Residents can help city leaders make tough decisions, he said.

“Would the citizens want the public parks mowed every week, or would they rather have the trash picked up on time?” he said, as an example.

In Sansom Park, Texas, a city of about 4,600 wedged between Fort Worth and Lake Worth, elected leaders have struggled to upgrade crumbling streets and clean up commercial areas with less-than-desirable storefronts.

But the city has launched a $3.6 million upgrade of its water system after receiving a $685,000 grant from the U.S. Agriculture Department, said Councilman Jim Barnett, who ran unopposed for re-election this month.

“We’ve been able to do a lot of infrastructure repairs with the help of the USDA,” he said.

Winning grants like that takes years of work, he said. It also helps to build relationships with county, state and federal officials who can help identify funding resources for small cities, or at least help with the work.

Tarrant County, for example, is known for helping cities with road projects.

Another small city, Blue Mound, Texas, which has about 2,400 residents living in just a few city blocks, is seeking a bill this legislative session to take over a private water system and operate it as a municipal utility.

Blue Mound residents pay $141 a month for 5,000 gallons of water, more than triple what a nearby customer pays in larger Saginaw.

Pelican Bay Mayor Clifford Tynes insists that his city will make ends meet this year and will adopt a more austere budget for the next fiscal year.

Pastor Glyn Murphy, who has a congregation of about 60 people at Lighthouse Harbor Church on the north end of Pelican Bay, believes that most people would like the city to keep its identity rather than become part of a larger neighbor.

But getting Pelican Bay to realize its potential has never been easy, he said.

The city was envisioned as a resort residential area, but those plans fizzled during the 1980s real estate bust. Instead, it became a residential haven for bargain hunters.

More recently, another developer cleared land for a gated neighborhood known as Laguna Bay Estates, with room for perhaps a couple of dozen homes surrounding a canal filled with water from Eagle Mountain Lake. But the development, which advertises waterfront lots from $69,000, has stalled in the tough economic times.

Nonetheless, Pelican Bay is still a growing city, attracting new residents with its promise of open space and cheap land.

“Now, with all the people moving in and out, I’d like to see us come together more,” said the pastor, who has lived in the area for 18 years. “A country town is where you know everybody else, and here it’s just not like that.”

But the little city does sport its own swimming beach, pier and boat launch, all of which are quite easy to access – that is, for motorists who are careful enough to avoid the potholes.

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