Strategies for financial recovery: the city of New Haven experience.

• Author: DeStefano, John, Jr.

As usual, this year's annual meeting of the U.S. Conference of Mayors hosted no shortage of proud leaders ready to boast about what their cities were accomplishing. Typical of U.S. cities, New Haven, Connecticut, has known both good times and tough times. Over the last five years, New Haven has made itself much, much better - and its mayor and citizens seek to make it better still.

New Haven is a pre-Revolutionary American city with a rich history. By 1950, more than 164,000 people lived in the city, with an economy largely defined by manufacturing, railways, and Yale University. Largely due to the presence of Yale University, New Haven has been blessed with cultural, scientific, and recreational resources well beyond those offered by most cities of its size. Despite launching one of the country's first major urban renewal efforts during the 1950s, the city struggled to adapt to economic change and compete with neighboring communities. Free to vote with cars that could speed down new, federally funded highways, more residents and businesses chose to leave than to stay.

In 1994, the current administration came into office to manage and rebuild the city. At that time, the city had little money in the bank and its credit was so shaky that it could hardly borrow. The city's population had fallen to about 125,000, while it lost 18 percent of its manufacturing jobs in only three years. To make matters worse, the city's public buildings and infrastructure were crumbling, while its fiscal health continued to deteriorate and its shrinking tax base smothered plans for capital investment. Looming just behind the budget deficit was a cash shortfall that delayed vendor payments. Meanwhile, city officials were wasting precious general fund dollars to subsidize the operation of assets once intended to be self-supporting.

Five years later, New Haven is a reborn American city. City officials have returned the jurisdiction back to a sound fiscal footing and are recreating a place where children learn in good schools, residents live in safe neighborhoods, and everyone has the opportunity to make the most of his or her talents. The city has accomplished this by following a path that avoids temporary, quick fixes in favor of creating a climate for sustainable economic growth and social well-being. New Haven has regenerated itself through competition and compassion:

* competition, by retaining existing residents and businesses and attracting new ones through cutting taxes, lightening the regulatory burden, offering quality services, and making investments to strengthen New Haven's great comparative advantages - arts, entertainment, transportation, technology, neighborhoods - while preparing to make the most of the new federal Empowerment Zone designation;

* compassion, by targeting employment, health, welfare, safety, and redevelopment efforts to individuals and areas of the city most in need.

Exercising Financial Leadership

New Haven could not have regenerated itself without financial leadership - leadership characterized by planning, innovation, problem-solving, and establishment of systems to tell its officials where they are financially, were they are going, and what they are getting for what they spend. The term leadership is used because of the importance that New Haven's executive administration places in having city...