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 (davealden53@comcast.net)

Who Pays the Bill for Cities?

Cities are essential to human existence.  More so than nations, cities are how we organize ourselves.  Nations are only a political overlay.  The renaissance history of Europe is a history of cities.  It was only after centuries of cities pushing humankind forward that nations entered the picture.

Cities are also the primary hub of economic activity, with their density and consolidated resources absolutely necessary to commerce.

And yet we lack good systems for adequately funding cities for the benefits they provide.  We gratefully accept the wealth that they spin into their surrounding regions, into their nation, and into the world.  But we largely ask them to fund themselves only with their own tax revenues.  We fail to adequately feed the engine to ensure that it continues.

This fact about cities was brought to mind by a recent story in the San Francisco Chronicle about a pair of teenagers who are lobbying for the City of Piedmont to be incorporated into the City of Oakland.  Their effort is quixotic.  With no adult support and an off-handed rejection by the Piedmont mayor, their lobbying will go nowhere.

But they’re still making a good and valid point.  Piedmont probably isn’t paying its fair share to support Oakland, the economy of which allows much of Piedmont’s affluence.

On that point, a recent article by the Brookings Institute found that the 300 largest metropolises in the world contain only 19 percent of the world’s population, but generate 48 percent of the world’s GDP.

Here in the North Bay, the economic activity of San Francisco and Oakland has a great effect on our lifestyles.  The North Bay would be a very different place without those two cities.

Similarly, the rural areas of the North Bay rely on the nearby towns.  The west counties would be less successful without the towns of San Rafael, Petaluma, and Santa Rosa.

But the mechanisms to compensate the cities and towns for being engines of economic prosperity are scanty and imperfect.  One method is the return of tax dollars from state and federal governments through grant programs.  However, those programs are directed from the top down.  Congress, the Legislature, and numerous federal and state agencies, set the rules by which the funds are to be used and then disburse the funds to the cities most willing to comply with the rules.

Effectively, cities, the fundamental unit of human organization, are reduced to being supplicants, forced to beg for treats.

A fine example is the decades-long history of Federal Transportation bills.  As Charles Marohn, founder of StrongTowns recently wrote for Better Cities and Towns, the approach of federal transportation policy has been to fund new roads and highways, leaving the local governments without adequate funds to provide often greater cost of long-term maintenance, leaving the local governments in worse condition than before the funds arrived.  The failure of the funding is so profound that Marohn suggests that many communities would be better off without federal transportation funds.

I’m not yet willing to go that far, but the problem he highlights is real and profound.  I sit on the transit advisory committee for a North Bay city.  In that role, I watch how grant funds are distributed to maintain and to operate the local bus service.  Some of the grants come with few strings, which is great.  But others come targeted for specific purposes that may or may not conform to the highest priorities of the city and its residents.

It’s important for regional or national standards to be promulgated.  It would make no sense for San Francisco to design its streets for 80,000 pound tractor-trailers if Daly City designs for only 40,000 pounds.  But the establishment of reasonable standards has become irrevocably entangled with the purse strings.

Not only is the creatively of cities being stifled, but many hours of time are being wasted at all levels of government in managing compliance with regulations that may not be beneficial.

I don’t have an answer to the knotty problem.  But I know that cities are legitimately entitled to financial support from the surrounding regions that rely on them for economic vitality and that the current way of providing those funds is ill-conceived.

Follow-Ups and Schedule Notes

Toronto Bike Lane: Remember the tussle over the removal of the Jarvis Street bike lane in Toronto?  The lane is now fully removed.  And Toronto has installed parking in the area formerly occupied by the bike lane, further infuriating bike lane advocates.

But in a boggling twist, the mayor who spearheaded the effort to remove the bike lane was ousted from office.  A judge directed that the mayor be removed for lobbying for a city contribution to his personal charity, voting for the contribution, and then refusing to refund the contribution when so directed by an arbiter.

Bicycle advocates rejoiced.  In perhaps the best comment on the situation, Movemeant tweeted, “Every time a bike lane is removed, a mayor loses his wings.”

Driverless Cars: Atlantic wrote about a race between the professional racecar driver and the computer in a driverless car.  The human won, but barely.  And the key point may be how the passengers in the driverless car quickly gained faith in the computer.

On the same subject, an NYU professor writes in the New Yorker about the ethical challenges posed by driverless cars, such as the decision to endanger either the passengers in the car or the potentially greater number of passengers in another vehicle.  Professor Gary Marcus poses the problem of how to program ethics when ethics are continually evolving to address new and different situations.

Petaluma Urban Chat: The next Petaluma Urban Chat will be Tuesday, December 11, 5:30pm at Aqus Café.  All are welcome, with particular encouragement to newcomers.  At this meeting, we’ll begin discussing the StrongTowns Curbside Chat booklet that can be found here.

As always, your questions or comments will be appreciated.  Please comment below or email me.  And thanks for reading. - Dave Alden (davealden53@comcast.net)