Myths of Population Decline and Fiscal Stress in American Cities
It’s day two at “Reinventing Older Communities: Bridging Growth & Opportunity” and I have demographic decline on my mind. The workshop was “Local Governments Do More With Less” and the first speaker at bat was Keith Wardrip (community development research manager, Federal Reserve Bank of Philadelphia). I should say I know Keith from graduate school at the University of Colorado-Boulder. We unexpectedly bumped into each other at the conference. I’m grateful for his invitation to come hear him speak. His research, “Fiscal Stress in the Small Postindustrial City” (PDF):
Today, the 10 cities featured in this report are home to between 40,000 and 120,000 residents. As Figure 1 illustrates, eight cities lost population between 1950 and 2010, with six of them shrinking by a quarter or more. Because the physical footprint of these cities did not contract with their populations and demolition did not keep pace, vacancy rates are generally much higher today, compared with historic levels and with their states. Between 1950 and 2010, only Bethlehem and Lancaster saw vacancy rates rise by fewer percentage points than their state; six of the cities had to contend with double-digit vacancy rates in 2010. Not only a symptom of population loss and falling residential demand, the proliferation of vacant housing imposes its own costs on municipal budgets — costs that can exacerbate already difficult fiscal situations.
Setting the stage with the shrinking city narrative needs to stop. Yes, urban residents did dine and dash. They ran up a huge tab and then escaped to the suburbs. That’s demographic water under the bridge. This debt is baked into the humble pie today’s politicians must eat.
Andy Kopplin (first deputy mayor and chief administrative officer, City of New Orleans) followed Keith. Kopplin said something as an aside that got my attention. A big part of dealing with the fiscal stress of New Orleans concerned a more honest reassessment of city real estate values. For all the talk of population decline, this kind of accounting slips under the radar. In fact, I figure that the mesofacts of exodus hinder reassessment efforts. How could property values go up in a dying city?
David R. Eichenthal (director, management and budget consulting, Public Financial Management, Inc.) batted clean-up and he hit the pitch out of the park Moneyball style. On the ignored side of the municipal finance equation, cities could figure out how to reduce the fires that the fire department needs to put out. Don’t accept city costs as chiseled in stone. Highlighting demographic decline focuses policy attention on generating revenue. Grow population or die. Forget increasing health care costs that weigh down pension obligations. Fiscal prudence takes a back seat to civic pride.