Bob Marley, the reggae singer, sang “The bigger they are, the harder they fall” and the lyrics strike a chord in big cities around the U.S. New York, Chicago, L.A., Philadephia, Detroit, Phoenix and Atlanta are among the cities reporting huge deficits.

In a 6/24/09 WSJ article, Douglas Belkin details Chicago’s woes and finds that fat fiscal spending in past years has deepened the budget crisis as the recent economic downturn has sharply reduced revenues.

Chicago’s experience should be a lesson for other cities. Through high sales taxes, increasing fees and privatization of city services like parking meters, Chicago’s revenues jumped in past years. City politicians pumped the extra revenue into their operating budget while residents paid higher fees from these now privatized services.

As sales tax and property tax revenues have declined, the City has fewer revenue sources to fall back on. While Morgan Stanley continues to rake in collections and high towing fees on many of Chicago’s parking meters, Chicago is laying off and furloughing city workers.

Arnold Schwarzenneger, governor of California, has repeatedly argued for a “rainy day” state savings fund. From this economic downturn, both state and city politicians can learn a lesson that they may not have learned in childhood – the value of saving.