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The more I report on the state of our cities for the Hometown Accounts series , the more I wonder if this will be the next big story after the mortgage meltdown. Cities struggling to balance their budgets this year have much worse dynamics looming around the corner. If you can imagine a graph with the incomes headed south and the liabilities headed north, that's what it looks like: a great big parting of the ways, with the gap between income and expense getting wider and wider.

Of course we are so busy dealing with the shock of what's going on right now with the crashing economy that it's almost impossible to consider a crisis hovering just over the horizon. But I suspect that when the metropolitan crisis hits, we'll all be asking, "How come we didn't hear about this earlier?"

City revenues , which are beginning to slide, don't yet reflect the reality of the rapidly plummeting economy. Ten of our 18 cities rely on property taxes as their main source of income . The only property value drops appearing on city ledgers so far are the homes that changed hands, because the new buyer is paying less in property taxes. But the homes that have lost value and have not changed hands, won't show up until the county assessor gets around to reassessing them. That won't be completed until later this year or next. The other eight cities depend on sales tax as their next largest source of income. They've seen horrible drops, but the full impact of falling Christmas sales hasn't been tallied yet. Tourist taxes are a significant source of support for five of our cities and they've dropped, though we haven't even begun the summer season.  

The crisis that appears to be barreling towards our cities wouldn't be so dire if it weren't for the other side of the ledger: liabilities. They look even scarier. Labor costs can be cut, but pension deficits will be beyond anyone's control as local governments have to make up the difference on funds that reflect plummeting stock markets. And the way the pension system is amortizing the pension debt is eerily reminiscent of the way mortgage lenders structured some of those variable rate loans.

How does all this affect our everyday lives? Cities provide public safety and water supplies, they staff the libraries, pick up the trash and provide parks for us to enjoy. They fix roads, roofs, fences, sinkholes and potholes. They pay towards homeless shelters and public events.

Cancelling a Forth of July Parade  may be a small sacrifice, compared to what some of our cities will be forced to consider over the next couple of years. And it seems that we just aren't moving fast enough to forestall the inevitable.

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