By Michael Pagano
This article originally appeared in Governing on October 11, 2013.
When cities struggle, as Detroit is doing now or New York did nearly 40 years ago, why don’t they just follow the blueprint from more successful urban areas? For the past 20 years or more, we have been subjected to a battery of best practices from which all cities should be able to learn.
If only the failing, struggling, decaying cities would have the courage and political will to enact the same set of policies that the dynamic, creative, fast-growth, magnet cities had enacted, everyone would be better. The secrets would become known, and the erstwhile magicians of city vitality will have let everyone know so that all can prosper.
If it only were so simple.
Silver bullets and magic beans slay the dragon and usher in the good life but are rarely replicable and almost never considered a best practice. A reporter asked me recently if, now that Detroit is entering federal bankruptcy courts through a Chapter 9 filing, we might be at the beginning of a parade of cities that follow its lead in adopting this particular best practice. Chapter 9 is a best practice?
Cities, urban regions, suburban communities and rural towns have only one thing in common and following a Pied Piper is not one of them. Besides being composed of human beings, cities are unique. As a collection of individuals and firms, they generate their own circadian rhythm. They develop a set of norms of conduct, behavior and expectations. They evolve and adapt to their changing environments. They create social organizations and establish rules, and they create governing institutions that respond to the needs and wants of school-age children, the elderly, commuters, and all other communities of people.
And city governments do all this within a resource constraint. Villages on steep hills are different from the villages on the flat plains. Snow and ice present opportunities to public works departments that sandstorms do not. In many ways, communities and cities often feel similar to other places, but they aren’t exactly the same.
Although there is a lot we can understand about undifferentiated cities by examining the actions of other cities (as the classic studies of Atlanta by Floyd Hunter in the 1950s and Clarence Stone in the 1990s, New Haven by Robert Dahl in the 1960s, and Middletown by the Linds in the 1930s demonstrate), not everything -- and it might be more accurate to say, very little -- can be replicated by another city or town.
Take urban fiscal policy as it relates to budgeting and revenue-generating activities. In the past few years, a few California cities have considered seeking Chapter 9 protection. Yet the option of declaring bankruptcy strikes many city leaders as not only absurd but illegal. Only 24 states allow their municipalities the option of seeking bankruptcy protection through federal courts.
Instead, those city officials are left wondering, what’s up in California? Why don’t the city councilmembers just raise the property tax rate? California probably would if it could, but it can’t. Cities in the Golden State are hamstrung by Proposition 13, the law limiting property tax increases.
Consider another common challenge for municipalities -- commuter costs. City officials expand transportation networks in their city in response to growth in employment opportunities in their city.
They also boost the public safety force during daytime hours as more people work in the city. Yet many of these people live outside the city’s taxing jurisdiction. That means increased public safety and transportation services must be covered by either shifting resources from other city departments or raising taxes on those who live in the city, or finding other ways to transfer the costs of those new services to the commuters. Yet, city residents don’t receive more services, because the augmented services are being consumed entirely by the commuters.
Boston’s elected officials are flummoxed over this quandary. They like the job growth, but they don’t like subsidizing the increased service delivery costs for those who do not contribute to the city’s tax base. They might consider what officials in Columbus, Ohio, did by collecting the city income tax at the place of employment (and at the place of residence), thereby providing a source of revenue from new employees who consume augmented city services. Unfortunately, it is not legal for Boston to collect an income tax. In fact, 90 percent of America’s cities are prevented by their states from doing so.
A best practice? Possibly. Transferable elsewhere? In most places, no.
This “fiscal policy space,” as my colleague Chris Hoene, executive director of the California Budget Project, and I call it, is unique to each city. The uniqueness of cities, then, is not just in their demographic composition, their geographical and topographical location, their economic engines, or their density and greenspace, but also by the shape of their fiscal policy space. And the reach of best practices is, as a consequence, quite limited.
My colleagues at the University of Illinois at Chicago’s College of Urban Planning and Public Affairs are in the process of analyzing this fiscal policy space of 100+ cities across the country, delving into reams of data to identify each city’s capacity amid the various constraints, like those above. We’re considering constraints such as the city’s revenue structure, its political culture, economic base, state laws, and other factors. It’s a huge task -- on one set of parameters alone we’re doing more than 400 hours of data analysis. We hope that when the project’s results begin to be posted in the next year or so, the profiles can help city leaders make smart urban policy within their own unique set of parameters.
As Bruce Katz’s new book, “The Metropolitan Revolution” reminds us, cities are where the nation’s economic engine starts. And public finance might be the overlooked but key element that drives growth.
Michael Pagano is dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago and author of many books and articles on urban finance, infrastructure, federalism and urban development.