American Notes Cities

Forget the economic "miracle" touted by ex-Governor Michael Dukakis: Massachusetts is suffering its worst slump since the Great Depression. Banks have failed, real estate values have wilted, and unemployment remains above 9%. Last week one of the state's most beleaguered cities, Chelsea (pop. 28,222), just north of Boston, had to be saved from financial collapse.

Over the years, Chelsea absorbed a heavy stream of poor immigrants who receive substantial amounts of welfare. Despite a $9 million deficit (in a $40 million budget), voters refuse to increase taxes, and city officials are unwilling to slash services. Result: schools still have not reopened this fall, and municipal employees are payless. The Massachusetts legislature last Wednesday empowered a private receiver to seize control of Chelsea and impose such drastic changes as revising police, fire and teacher contracts and suspending zoning rules. But lawmakers fear that Chelsea will demand new state funds, which may inspire other struggling towns to look to the statehouse for a bailout.