Honestly, this is a real discussion we do need to have.

So many municipalities have over-expanded things like their water systems beyond the point that communities can afford to maintain them using the tax revenue generated by those communities.

Is it really doing right by a place to saddle them with a massive, expensive system they cannot afford to maintain? The federal dollars are going to show up, replace the system with a state-of-the-art one of at least the same size if not bigger, and then what? 30, 40 years from now, who will be there to give them the critical fixes they will still need? And in the meantime, their community will need to devote even more of its revenues (tax dollars) to maintaining the water system – but that means neglecting other things that ALSO need spending.

The shit happening in Jackson and Flint isn’t MERELY idiot government incompetence. It’s also a sign of urban decay affecting so many municipalities. And it’s going to get worse before it gets better at the rate we’re going as a society because we keep build build build-ing while pretending cities don’t need to be productive or have balanced budgets. But they do. Cities aren’t national governments. They can’t print money. If they issue bonds, they need to pay those bondholders back using real money collected from taxes. If they don’t have the money to do city things, they just stop being able to do city things. And it doesn’t look like bankruptcy when they cease to be able to do city things – it looks like potholes and busted, toxic water systems.

That’s not to say we shouldn’t get these systems fixed so they aren’t poisoning people. Of course we can’t be poisoning people. But the discussion needs to be more sensitive than just “spend the money fix the shit no matter what it costs.” Every city needs to think very, very carefully about how they may fix their systems to make them more sustainable in the future. No matter what they do, it is going to be financially devastating on some time horizon, but cities need to stop buying more infrastructure than they can maintain on debt and just shrugging the problem off to the next generation because that’s how we got to this problem in the first place.

side-note:

My proposed solution is to get the richer areas of the city/state to help pay for the poorer areas. Everybody has skin in the game as far as the benefits, so why not the costs?

Backwards from reality. The richest parts of town, with the new, state-of-the-art infrastructure and the vastly inferior and less productive land uses typically generate a lower or even negative ROI compared to the poorer parts of the city. The poor neighborhoods more often subsidize the rich ones. Look at e.g., the case studies made by Urban3, which Strong Towns and other urbanist organizations often write up. The older developments are funding the spending on new infrastructure even while their own infrastructure is so neglected it is poisoning people. And just throwing federal dollars on it is not going to force a change in behavior in the cities.

Personally, I’d like to see any fixes for these old water systems attached to e.g., adding land use taxes (that would affect large lot R1A single family homes FAR worse than traditional (poor) communities) or dis-incorporating unproductive (wealthy) suburban areas from the city to fend for themselves (since they can afford it, unlike the productive, poor neighborhoods).