I was venting about this on Twitter earlier, but it deserves a proper blog post.
The problems of PA’s distressed mid-sized cities are an issue I care about a great deal. Older cities are badly disadvantaged by state-level municipal finance and annexation policies, which set them up for decline.
Setting up mid-sized cities for success will require changes to a variety of these state-level policies, and so of course I am very glad to see PA Senate Democrats prioritizing this issue. It’s a huge deal that state-level politicians are interested in engaging with these problems, and they deserve a lot of credit for taking this up. What a party chooses to talk about when it’s out of power tends to be a pretty good predictor of what it will try to do when it gets power, so it’s heartening to see metropolitics becoming subsumed into the state-level Democratic political agenda.
That said, the policy ideas that Senate Democrats released fall far short of the scale of the problem.
None of them are bad ideas, but all suffer from the same mistaken premise – they locate the source of distressed cities’ problems at the city level, not the regional level.
Here are some of the big ideas mentioned in Robert Swift’s article on this:
- Provide school district property tax rebates to first-time homebuyers who purchase a primary residence in a mid-sized city school district
- Use table game revenues to reduce property taxes in urban areas to promote home ownership and rebuild the tax base.
- More rigid Act 47 review process with fiscal “stress tests”, earlier disclosure of negative signs like underfunded pensions, and mandates to identify what economic strengths municipalities can build on.
- Give municipalities other than Pittsburgh the option of creating an Intergovernmental Cooperation Authority
- Safeguards for municipal borrowing under the Local Government Debt Unit Act
- Requiring cooperation between cities and school districts on comprehensive fiscal recovery plans
- Consolidating school district transportation services at the Intermediate Unit level
- Surcharge on traffic violations to pay for state grant program for municipalities with part-time police officers
That last idea really gets at the weakness of the Senate Dems’ theory of change. The root problem there is that there are municipal tax bases so small that part-time police officer is a job that exists.
Subsidizing the choice to have tiny political units that can’t afford full-time cops isn’t a solution. The solution is to push those municipalities to:
1. contract for police services from the County government
2. contract for police services from a larger neighboring municipality that can afford full-time police, or
3. disincorporate and allow a neighboring municipality to annex their land area
If the problem is that there are so many political units with tax bases too small to afford professional services, then the solution needs to be enlarging the local tax bases.
This is also a problem with other recommendations like property tax rebates for first-time homebuyers in urban school districts. The actual problem there is that there are urban school districts with separate tax bases from suburban school districts.
Rather than introducing a new tax subsidy that will lose revenue for the state or for school districts (depending on who pays), the obvious solution is to consolidate school district tax bases at the Intermediate Unit level.
Then it doesn’t matter at all whether homebuyers choose homes in the suburbs or in the cities – they’re all paying taxes to the same government. The Senate Dems have a good idea to consolidate school transportation services at the Intermediate Unit level. They should run with that logic, and explore what other savings could be had by consolidating services at the County or Intermediate Units.
Right now the Intermediate Units are deliberately designed to be largely powerless advisory-only bodies, and not real governments. If the goal is to level the playing field for cities by improving the quality of public services and lowering tax rates, then a pretty obvious move is dissolving the arbitrary political boundaries that keep urban areas from getting their fair share of the tax revenue produced by metro economies.
What would a better plan look like? I have a few ideas, and the common thread is leveraging state aid to municipalities and school districts to push them to share services, or consolidate political units.
New Jersey’s state Senate recently passed a bill that Senate Dems should look to as a model. The state would force municipalities to share services or else they’d lose state aid:
For Sweeney, who championed shared services on a county level as a Gloucester County freeholder, yesterday’s 25-9 Senate vote was the latest step in his 22-month battle to hold down property taxes forcing municipalities to share services where savings can be proven. “We’ve tried the carrot. We need to try the stick,” Sweeney is fond of saying. “We need to try the stick.”
“If governments don’t wish to run their towns more cost-effectively, there is no reason the taxpayers of New Jersey should have to foot their bill,” Sweeney said yesterday, referring to the provision in his bill that would give voters the option of approving shared services, but take away state aid equivalent to the projected cost savings from any town whose voters reject shared services. “Taxpayers of this state need a break and shared services is one way to give it to them.”
Sweeney’s bill shifts the principal responsibility for initiating shared services from municipalities to New Jersey’s Local Unit Alignment, Reorganization, and Consolidation Commission (LUARCC), which would be empowered not only to study municipal governments to determine where taxpayer dollars could be saved. If the towns involved fail to enact a LUARCC-recommended shared services agreement, the plan would go on the ballot as a referendum question. Voters in any town rejecting such a shared-services ballot question would lose state aid.
The other idea Senate Democrats need to incorporate into their plan is building Counties’ capacity to deliver municipal services. Chris Briem has persuaded me that the best political strategy for accomplishing this is for Counties to start offering a menu of municipal services that their constituent municipalities can choose to buy. Rather than administering police services in-house, those cities with part-time police officers could choose to contract with their County government for police. They would lower their municipal property taxes since those taxes would no longer pay for police, and they’d pay somewhat higher County taxes.
As Counties deliver police (and fire, and 911, etc) services to more of their municipalities, the per-person costs of providing those services will go down. Property taxes will be lower, and you’ll basically have something pretty close to a regional tax base for public services. Cities will no longer be competing at a disadvantage on service quality or taxes.
There are a lot more good ideas out there for making PA’s older cities more competitive, but what most of them have in common is that they locate the source of the problems at the metro level, not the city level. Any plan that’s going to work will need to enlarge the tax base for public services like police and education, and give cities access to their fair share of the tax revenue produced by regional economies.