A10| Wednesday, March 4, 2020 THE WALL STREET JOURNAL.
employed men over 16 worked
in manufacturing, according to
the 1970 census.
“Everybody had a nice
fenced-off yard,” Mr. Clark re-
called of his boyhood neigh-
borhood. “There was either a
Cadillac or a Lincoln in front.”
The local Dixie Square Mall
had more than 50 stores, in-
cluding Woolworth and Mont-
gomery Ward.
Mr. Clark drove a forklift
before getting a scholarship to
law school. He opened his law
practice 10 years ago in a for-
mer jewelry store downtown.
Factories closed in the
1980s, taking jobs with them.
By 1990, nearly 15% of men
ages 25 to 54 were unem-
ployed, according to the cen-
sus. Dixie Square Mall was de-
molished in 2012 after closing
years earlier.
Longtime residents dis-
persed to other states. For
years, they held annual gath-
erings, called “Harvey Days,”
in Florida, California and Ari-
zona. The reunions drew thou-
sands of people who had lived,
worked or attended high
school in Harvey, said Carl
Durnavich, who helped orga-
nize many of them.
After the financial crisis,city services hit bottom. Bro-
ken streetlights went unre-
paired, and the fire depart-
ment was down to one
working fire engine. Firefight-
ers who couldn’t fit aboard,
crammed into a pickup truck,
said Ron DeYoung, president
of International Association of
Fire Fighters Local 471.
The economic recovery fi-
nally hit town. One of the
city’s remaining manufactur-
ers, Sterling Site Access Solu-
tions, which straddles Harvey
and the adjacent town of
Phoenix, Ill., added roughly
100 jobs between 2013 and- About half were skilled
manufacturing positions. The
local plant of an international
lubricant-maker also expanded
its workforce.
In 2018, the city’s total pri-
vate-sector jobs ticked up for
the first time in six years, ac-
cording to a state report.
Then, the following year, job
numbers fell, eroding most of
the gains.
Voters selected Mr. Clark,
an outspoken alderman, as
mayor. Local employers hailed
him as an ally. In the weeks af-
ter Mr. Clark’s inauguration,
residents reported that some
alleys had been cleared for the
first time in years.
Balancing act
Harvey seemed poised for a
turnaround. Signs of distress
emerged instead. Property
taxes, the city’s largest reve-
nue source, fell in the 2018 fis-
cal year, which ended April 30,- The decline wasn’t re-
ported until an audit was com-
pleted in October.
Raising rates to make up
the losses risked driving away
residents and business. Ster-
ling opened a new plant last
year, but it was in Texas.
Carter Sterling, the company’s
U.S.—is expected to be lower
in fiscal 2019 than in fiscal
2018, adjusted for inflation,
the first such dip in seven
years. The cities range in pop-
ulation from the low tens of
thousands to the millions.
General-fund revenue typi-
cally represents dollars not
earmarked for a specific pur-
pose, a flexible pot of money
to spend on public goods and
services.
“It’s a big deal when you
have this many cities con-
cerned about the near-term
future,” said Matt Fabian, a
partner with municipal bond
research firm Municipal Mar-
ket Analytics. “Maybe they
don’t hire new police as
quickly as they did be-
fore...Maybe they put off plans
to address the big challenges
that cities are facing like pen-
sions and climate change.”
American cities are gener-
ally doing better than rural
communities, buoyed by the
U.S. expansion. Yet the boom
in such metropolitan areas as
Denver, Salt Lake City and
Nashville, Tenn., masked fiscal
weakness in cities tied to man-
ufacturing and other shrinking
industries.
Fallout from the coronavi-
rus disease on the U.S. econ-
omy and city budgets is an-
other potential setback. In the
past week, New York City has
held daily meetings of pension
advisers, and California put
out a warning to prospective
municipal bond investors.
All regions of the U.S. con-
tains cities that are losing fis-
cal ground, the Journal found.
In the West, 29% of cities ex-
pected declines of more than
3% in general-fund revenue in
fiscal 2019, up from 18% in fis-
cal 2018. In the South, the
proportion of cities reporting
a revenue drop went to 20%
from 16%, using the same mea-
sure; in the Northeast, it went
to 31% from 14%.
On the flip side, nearly 60%
of U.S. cities reported general-
fund revenue increases that
outpaced inflation in fiscal
- Yet even in this group,
expectations are fading: Cities
expecting similar growth in
fiscal 2019 fell to 53%.
Stagnating or declining rev-
enues are easier to manage for
growing cities in the West and
South. In New England and the
Midwest, many places are
struggling with losses of pop-
ulation as well as industry.
Job losses hit hardest in
cities that have been barely
keeping pace with expenses
during the recovery. Tighter
household budgets translate
into smaller sales-tax alloca-
tions. City populations shrink
when residents follow jobs out
of town, hurting home prices,
commerce and property tax
collections.
The general-revenue de-
clines struck earliest in the
Midwest, where combined in-
flation-adjusted city revenues
fell by 4.3% in the 2018 fiscal
year from 2017, the Journal
found.
Over the 12 months ending
in November, 28 metropolitan
areas in the Midwest lost
manufacturing jobs, according
to the Bureau of Labor Statis-
tics, including Detroit, Youngs-
town, Ohio, and Louisville, Ky.
Some losses stem from the
shifting global economy and
ContinuedfromPageOne
In Northern Minnesota, ice-
fishing is big business. Nor-
mally, resorts plow fluffy snow
off several feet of solid ice, to
create vast networks of roads
for anglers to use.
This year, early snows blan-
keted the ice before it was thick
enough to drive on and eventu-
ally got so heavy that the ice
cracked, just about killing the
season. The bad conditions
forced resorts to cancel reser-
vations, ask for low-interest
state loans and call on every bit
of ingenuity at their disposal to
salvage what they could.
Since anglers’ trucks couldn’t
go on the ice, some resorts used
small SUVs with tracks instead
of wheels to ferry guests to
ContinuedfromPageOne
fishing spots, dubbing the ser-
vice “Uber on the Ice.” Others
used suburban-style snowblow-
ers to clear paths that allowed
anglers to walk across a thin
frozen layer on top of about
two feet of slush.
Some simply battled on,
plowing a truck-length or two
on the crust, until their vehicle
broke through. They would
then pull the vehicle out, wait a
day or two for the cleared area
to freeze over, and then drive
over that frozen spot until they
got stuck again.
“I’ve never seen anything
like this,” said Tyler’s dad,
Roger Croaker, 49, who has
worked at Nodak Lodge in
Bena, Minn., for 31 years and
owned it since 2005. His busi-
ness is down 75% for the sea-
son, which ends in mid-March—
a time that makes up about
40% of his yearly revenue.
When Tyler, 31, got stuck, he
calmly called his dad, who
drove to the rescue over bumpy
ice roads in his half-ton pickup.
After six or seven attempts,
Roger finally pulled the biggervehicle free of the slushy hole.
Around Thanksgiving, most
resorts were celebrating an
early freeze, with about a foot
of solid ice. Then a series of
storms began dumping snow
that blanketed the ice in a five-
county region from Park Rapids
to Kabetogoma, cutting off fur-
ther freezing of that bottom
layer for the rest of the season.
The worst blow came just
after Christmas, when about 15
inches of heavy, wet snow was
too much for the ice at the bot-
tom of the pile. It cracked un-
der the weight, allowing water
to seep up and create a slushy
mess—a rare occurrence so late
in the season, when the ice is
usually thick and strong.
Most resorts were booked
solid in January, the real heart
of the season, when anglers
would come to catch fish such
as Northern Pike and Walleye.
Resort owners canceled reser-
vations and posted on social
media to turn away day visitors
who pay an entrance fee to
drive their vehicles onto the
frozen roads—which wouldnormally extend 20 miles to 30
miles across the lakes for many
resorts.
“People want to fish so bad.
We were getting 180 and 200
phone calls a day... How else do
you make it through a Minne-
sota winter?” said Kim Leon-
hardt, 47, who owns High Banks
Resort with her husband, Rick,- The top layer of slush began
to freeze but was nowhere near
strong enough to support a
snowplow. So High Banks used
an armada of tracked SUVs and
even a re-purposed van to ferry
fishing fans onto the lake.
Still, with limited access
during the best ice fishing of
the season, business at High
Banks is off 40%. The resort
counts on ice fishing for about
half of its yearly revenue.
Chad Mertz, at the Pines Re-
sort & Campground, had posi-
tioned six fishing houses about
2 miles offshore before the post-
Christmas storm. He was deter-
mined to build a road to them
before they sank into the slush.
With snow still falling on the
thinlayeroficeontopofthe
slush, his plan was to clear what
he could to expose the slush to
the cold air and allow it to
freeze. It was a grind.
At one point, he got four of
his trucks trapped between
cracks on the ice. The whole
crew had to walk home. “It was
cold,” he said.
On nearby Leech Lake, Ad-
venture North Resort had bet-
ter luck. The resort set up ice-
fishing houses just a quarter of
a mile offshore. Instead of us-
ing heavier equipment, they got
out a small snowblower and
kept a path cleared for people
to walk out to them.
They ended up having one of
their best Januarys, said ShayFortier, who owns the resort
with her husband, Steve Kro-
gen. She said when they took
over the resort 19 years ago, a
small snowblower was all the
equipment they could afford.
“We were returning to our
roots,” she said.
By mid-February, a cold snap
was able to penetrate through
the slush and snow, and most
resorts began making progress
creating roads.
Jim and Kathy Mahon of
Rochester, Minn., had been
forced to head north to Lake of
the Woods to get their ice-fish-
ing fix earlier in the season.
Last week, they sat sipping beer
at the bar of the High Banks af-
ter catching more than 100 fish
on Lake Winnie, as locals call it.
Mr. Mahon admitted his wife
was the real fisher, having
caught 61 perch to his 41. She
had also won $1 side bets on
first fish and biggest fish, Mr.
Mahon said.
“You are allowed to use two
poles, but they were biting so
fast, you only had time to use
one,” Ms. Mahon said.chief executive, said he de-
cided to expand out of state,
in part, because property
taxes in Harvey and neighbor-
ing Phoenix were too high.
Property owners in Har-
vey pay some of the highest
rates in the Chicago metropol-
itan area, according to an
analysis from the Civic Federa-
tion, a business-backed watch-
dog group.
David Abshire, vice presi-
dent at LB Steel, a local manu-
facturer, said the city’s prop-
erty tax rates discourage new
business, especially with city
services falling short. Mr.
Clark isn’t considering lower-
ing property taxes, he said, be-
cause Harvey needs revenue.
Mr. Abshire praised the
mayor’s work, but he said he
was waiting for the city to
raze the collapsing build-
ing across the street from LB
Steel. It makes a poor impres-
sion on executives he invites
to see his nearly 500,
square-foot facility. “We have
world-class customers coming
here,” Mr. Abshire said.
City officials said they were
working on securing funds to
tear down many vacant struc-
turesintown.
Decisions by Mr. Clark’s
predecessor, Eric Kellogg,
drove up the city’s bond debt
to $35 million. Its liability to
police and firefighter pension
funds grew to $82 million. Use
of some of the bond proceeds
drew scrutiny from the Securi-
ties and Exchange Commis-
sion, which charged the for-
mer mayor with fraud after
finding the city spent investor
money for a hotel project on
payroll instead. In a civil set-
tlement with the SEC, Mr. Kel-
logg agreed to stay out of
bond deals. He didn’t respond
to requests for comment.
The state in 2018 began
garnishing millions of dollars
in city revenues to refill pen-
sion coffers. Like many cities,
Harvey had long made
smaller-than-needed payments
to swelling pension obliga-
tions. During Mr. Kellogg’s
tenure, the city paid nothing
into police and fire pension
funds for several years, ac-
cording to city reports.
Harvey has less than 33
cents on hand for every dollar
of benefits it has promised re-
tired and working police offi-
cers and about 17 cents for ev-
ery dollar owed retired and
working firefighters. One mea-
sure of its shrinking fortunes:
The city sends paychecks to
more retired firefighters than
working ones.
Mr. Clark had hoped offi-
cials representing police and
fire pension funds would agree
to accept smaller payments
over a longer period, giving
the city more leeway for ur-
gent expenses. Fund officials
haven’t agreed.
Bringing an economic re-
covery to Harvey will be a
huge challenge, said City
Councilwoman Shirley Drew-
enski, a college administrator.
Her 3-bedroom house, built by
her parents, was valued at
$46,580 by the county asses-
sor’s office, less than what she
paid for her new car.
Mr. Clark is focused on
making the most of the reve-
nue he has. The city public
works department bought two
new snowplows and new mow-
ers. Some streetlights are set
to be repaired with a grant for
energy-saving LED lighting.
“You know that some things
aren’t going to happen,“ he
said of the city’s prospects
”You know that you’re going
to live a life of hand-me-
downs.”
—Cezary Podkul contributed
to this article.Dozens of
Cities Face
Trouble
Fishing
Resorts on
Thin Ice
disruptions from the U.S.-
China trade war. In Blue
Springs, Mo., population
55,000, an auto-parts manu-
facturer last fall announced it
was closing its plant to save
costs, a loss of more than 150
local jobs. Operations are
moving to Monterrey, Mexico,
a company executive said. The
city expects general-fund reve-
nue to fall slightly for the cur-
rent fiscal year, which ends on
Sept. 30.Pension IOU
Many cities operating with
little fiscal breathing room
have been sweating to cover
day-to-day city operations un-
der the burden of growing re-
tirement costs and past bor-
rowing.
Bond and pension liabilities
owed by roughly 1,000 U.S. cit-
ies ballooned nearly 25% to
about $500 billion in 2018
compared with 2013, accord-
ing to an analysis of data from
Merritt Research Services.
Roughly 50 million Americans
live in cities that are devoting
at least a fifth of annual
spending to debt.
As many as 20 of the larg-
est U.S. cities could face either
service cuts or tax increases to
cover the costs of pensions,
retiree health care and inter-
est on bond debt, according to
a J.P. Morgan Asset Manage-
ment study. New Haven, Conn.,
and Jersey City, N.J., for in-stance, raised taxes last year
to cover such expenses.
Few municipalities are in a
deeper hole for their size than
Harvey, a city of 24,641 that
was founded in 1891 by a lum-
ber tycoon.
Harvey, located about 17
miles south of downtown Chi-
cago, grew into an industrial
center, producing car mufflers,
farm and mining equipment
and military airplane parts.
When Mr. Clark, the new
mayor, was born a half-cen-
tury ago, the population was
nearly 35,000. Roughly 46% of$05101520million2010 ’12 ’14 ’16 ’Harvey'spension
anddebtpayments
relativetorevenues*Totalbondandpensionsdebtof1,000U.S.citiesandtowns‡Harvey'spensioncostsas
ashareofpoliceandfire
departmentbudgets*†Sources: Harvey City budgets and CAFRs; Merritt Research Services (total bond and pension debt)‡Data covers roughly 1,000 cities and towns inhabited by about 130 million people.
‘Current’ reflects the most recent available audited financials reports.*2019 figure reflects budgeted numbers †2020 is a projection.Bond paymentsPolice and fire
pension paymentsGeneral fund
revenueFirePolice400102030%2010 ’12 ’14 ’16 ’18 ’CurrentBonddebt255249Pensiondebt$270billion
233215155FROM PAGE ONE
Cool rideEugene Spikes has been working seven months at Sterling Site Access Solutions in Harvey, Ill.A downtown intersection in Harvey, Ill. Mayor Christopher Clark, below, learned of his city’s fiscal troubles after taking office.MICHELLE KANAAR FOR THE WALL STREET JOURNAL (3)