Lessons of receivership: the legacy of Chelsea.

• Author: Cox, William
• Position: Massachusetts

The state-appointed receiver for the City of Chelsea, Massachusetts, has confronted many obstacles in his quest for a more viable economic future for the city.

The receivership of Chelsea, Mass.--now in its second year--and the daunting responsibilities of the state-appointed receiver have not only touched the lives of the citizens of Chelsea but also are providing government leaders in and outside of Massachusetts with numerous lessons in government restructuring.

In September 1991, Massachusetts enacted special legislation to place Chelsea into receivership. Events preceding the action included failed financial intervention by the state, a political stalemate over the city's budget, deepening economic decline, and a spiraling fiscal crisis.

Fortunately, Chelsea had no publicly held long-term debt--thus, a solution to its problems could be explored in isolation of creditors. To avoid political inhibitions--the second obstacle to achieving substantive governmental change--the receiver was given broad powers and responsibilities in lieu of the elected mayor and aldermen and other officials. Appointed by the governor and advised by a broad spectrum of public and private leaders, the receiver will likely remain in office through 1996, with the goal of providing a framework for sound operating and capital budgets and, ultimately, recommending a new form of government.

The public policy and finance communities have a great deal to learn from the example of Chelsea. In turn, the citizens and leaders of Chelsea have a unique opportunity to implement absolute change in isolation of political recriminations.

Across the nation, at every level of government, leaders are grappling with the difficult problem of choosing, delivering, and paying for appropriate levels of service amid economic and political change. Much public debate has focused on the need to "reinvent government." The popularity of that theme can be attributed to a confluence of events that include the recent recession's unexpectedly severe impact on governmental revenues, the increased burdens of social and federally mandated costs, an explosion of public debt, decreased accountability, and a growing perception of infrastructure decay.

The events taking place in Chelsea fill the gap between the theory and practice of "reinventing government." In a real-life experiment, policy specialists, government officials, employees, and--most importantly--the community are engaging in the reformation their local government.

The...