Introduction
Earlier in February, I had the opportunity to speak to visiting students and faculty from Korea at UT-Dallas. Most of these visitors are focusing on architecture, engineering and public policy so they are usually interested to learn about U.S. cities, governance and economic development. The following are some of the slides I shared. These focus on our early research into why so many cities find themselves in tough times financially. You can find the full briefing, which also covers some basics of Texas municipal government here.
Fiscally Healthy City
We define a fiscally healthy city as one that, over the long-run, its tax base and revenue system supports its services and infrastructure without causing competitive disadvantages.
The Fiscal Cycle
Stylized History of U.S. Municipal Finances
The roots of municipal fiscal insecurity are largely from a lack of transparency and citizen engagement. That means… Lax fiscal practices and poor choices until… Major economic crisis reveals the level of ongoing fiscal stress. It is a regular pattern.
There was no golden urban age. U.S. cities have been trying to catch up to their constituents’ demands for more and better services for 200 years:
- Population growth
- Technology change (business practices and energy sources)
- Awareness and costs of health and environmental risks
- Political and cultural changes
- Economic competition from federalism
Land use remains an ongoing challenge for cities. Cities shifted from a largely urban form to a majority suburban form. This has several consequences for sustainability:
- More unproductive space per parcel (setbacks, parking)
- Requires more public infrastructure per private building
- Requires more city fleet and staff per household / business
- More privacy, more space
Sprawl has higher internal and external costs, but mostly internal benefits. It is a higher-cost way of occupying the land. Over time, some cities can afford it, some not.
Neighborhood Decline and the Favored Quarter
You can find decaying neighborhoods of all types across America.
Any neighborhood, urban or suburban can decline. A city’s prospects depend on how much of its favored quarter remains inside its corporate limits. The fortunes of suburbs largely depends on which side of town they lay.
Favored quarters everywhere. Pinks = household inc. > $100K, blues < $25K.
Dallas and Fort Worth each have a favored quarter, north and southwest, respectively.
Rise of Modern Cities
19th Century City Spending.
U.S. cities modernized in the middle of the 19th century. They added professional police and fire departments, adopted libraries and cultural facilities, built parks and all the modern infrastructure we associate with a city: paved streets, water mains and other utilities. Since that time, city spending has grown faster than city population. Larger cities have been spending more for over a century.
Growing public safety costs, adjusted for inflation and population growth.
In the 20th Century, those services that were adopted in years past cost more and more. This is partly because we are a more metropolitan nation. There are more large cities with residents that have similar, high expectations about the appropriate level of municipal services. It is also because cities produce their services with a lot of labor. Local governments have done little to replace staf with automation, but there have been significant increases in the capital equipment that have helped these staff improve the effectiveness of operations. Still, worker costs keep increasing. Cities will need to look for different ways of delivering services if they hope to stay solvent in coming years.
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