Friday, November 30, 2012

More Thoughts on City Finances

My recent post on city finances elicited several positive responses.  For those who missed it, I argued that cities, although disproportionate producers of wealth, lack a tax base commensurate with their economic value.  And that many of the supplemental funds available to cities through federal and state programs are governed by how federal and state government view cities rather than how cities view themselves.

Given the positive response, I’ll remain on the topic for another post, starting with an Atlantic Cities article authored by creative class guru Richard Florida.   Florida hypothesized that the peak density of a city would be a better predictor of city productivity than overall density.   So he and a researcher pushed the numbers using census tract data.

As an example of the correlation Florida thought might be found, Los Angeles has a higher overall density than New York City, but New York City has the greater peak density in lower Manhattan.  So Florida thought that New York City might outperform Los Angeles on measures of urban success.

With the standard caveat that correlation may not imply causation, the findings seem to support the hypothesis.  Peak urban density is a better predictor of income, economic output, and culture than city-wide data.  However, before jumping to too many conclusions, it should also be noted that the density in one-mile and five-mile circles around the point of peak density also beat the overall density as a predictor.

The article represents a preliminary effort on a subject that requires more study.  But the tentative conclusion is that cities are good and dense cities are even better.

Some may wonder why, if cities are underfunded, the system isn’t changed to direct more funds toward them.  On that point, an old Russian proverb speaks eloquently, “When money speaks, the truth keeps silent.”  Sending more money to cities would require either higher taxes or a redistribution of tax revenues away from another level of government.  And those oxen aren’t easily gored.

To illustrate the point, I’ll share a story from my distant past.

Many years ago, I walked a precinct for a good friend who was running for the Oregon Legislature.  As those of you who have done precinct walking know, the goal of a good precinct walker is to be transparent.  To convey the skills and philosophy of the candidate without injecting one’s own beliefs.  To be the complete antithesis of someone willing to blog thrice weekly.  Which means that I wasn’t very good at it.

The candidate likely understood that I wasn’t a good fit for the role.  He was a good friend and I was eager to help his campaign.  But I still remember him reminding me not to get off topic.  I was to be there as his representative and nothing else.

I tried.  I really did.  At most of the homes, I conducted appropriately short and effective chats before moving on.  But a few of the homeowners insisted on engaging me.  With some, I had fine conversations on points about which we agreed.  But some spouted opinions that I found nonsense.

At the time, property tax policy was a hot political topic.  In general, residents of cities paid higher property taxes than residents of unincorporated areas, even though the non-city residents used many of the same public facilities when they came into town for employment, shopping, dining, or culture.  Ideas were being bandied about for equalizing the tax burdens.  And I was generally supportive.  Not surprisingly, many non-city residents weren’t enthused.  It was their wallets that were under attack.

One homeowner asked about the candidate’s thoughts on this issue.  To my knowledge, the candidate hadn’t yet taken a position.  But when the homeowner pushed the point, I failed Precinct Walker 101.  I told the homeowner that I supported property tax adjustments.  And the debate was on.

Even though the homeowner drove into the city almost every day, he argued that he was already contributing his fair share.  His argument fell into the “I pay something, therefore I pay enough” logic, which is often evoked and nearly as often wrong.

Eventually, I asked about fire protection.  He lived far beyond any fire hydrant system, was adjoined on two sides by a national forest, was surrounded by trees and tall grasses that were drying in the summer sun, and was served by a rural fire district that was clearly inadequate to fight a major wildfire.

Even though his rural fire district would be supplemented by the city fire department, the homeowner didn’t believe he should pay for that city service.  Instead, he told me that a major wildfire couldn’t happen.  That the waving grasses and tinder dry trees around his home couldn’t possibly burn.  Money was speaking loudly and the truth was being cowed into silence.

I abandoned the conversation and moved onto the next home, muttering to myself.

Before the summer was over, a wildfire erupted in the neighborhood.  It quickly grew beyond firefighting capacity of the rural fire district, so the city rolled in with backup.  The combined forces were able to save some, but not all, of the homes.

Within the fire toll were the homes of many of the folks with whom I’d spoken, including the home of the man who claimed that a fire wasn’t possible.  I’m not one to celebrate the misfortune of others, but I lamented his loss a bit less than I lamented the losses of his neighbors.

And about the candidate for whom I did the precinct walking?  Despite my imperfect assistance, he won the election, which led to a thirteen-year career in public service during which he served Oregon well.  Including the reform of property taxes.  The truth will eventually speak up, but it needs someone to act as its advocate.

As always, your questions or comments will be appreciated.  Please comment below or email me.  And thanks for reading. - Dave Alden (


  1. I'm continually shocked at how much people are unaware of the costs of the services which support them. When I lived out in Lagunitas, we lived on a ... I'm not sure of the exact term, but we the residents were responsible for the maintenance of the road, even though there were gasoline tax dollars set aside for it. It only got resurfaced once every blue moon, but I lived there when it did, and we all got a great education in the cost of services, and the proportion of road maintenance that was actually paid for by gas taxes...

    Of course then some of those same neighbors went all NIMBY when MMWD wanted to upgrade the water system to provide some firefighting capabilities to the San Geronimo Valley...

    1. Dan, you're absolutely correct. Having been on both the consumer and the infrastructure construction side, I'm sometimes startled at how much infrastructure we've managed to afford by pooling the nickels and dimes that are collected from consumers. Of course, the definition of "afford" may soon be up for review.