Do Cities Need More Autonomy?
Cities have become an indirect beneficiary of the federal government’s ever-growing reputation for dysfunction. This year, the Brookings Institution, Benjamin Barber, Thomas Friedman and David Brooks have all argued that city governments are now setting the standard for effective policymaking across the nation. Some believe that cities’ recent record justifies devolving more responsibilities to the local level, or at least reining in burdensome state and federal mandates. Already free from the incompetence and partisanship that continues to paralyze the federal government, perhaps cities deserve more autonomy to do more, and if we grant it to them, the nation as a whole would benefit.
But before asking them to do more, we should carefully assess how well cities are meeting their current obligations. The results are not, in every respect, encouraging. A recent Wall Street Journal series highlighted city governments’ fiscal woes, which still persist over four years after the recession ended, and have sometimes resulted in insolvency. Weak leadership and management are far-too common, especially among the nation’s many small and mid-sized cities. Some cities, in some areas, may be achieving great things. But it could just as easily be argued that, generally speaking, local governments’ problems and need for reform merit more attention than their achievements. And it’s far from clear that liberation is the most promising path to reform. More oversight, by state governments or federal bankruptcy judges, has certainly proved to be unavoidable in the case of Detroit and other fiscally-distressed cities.
So do cities need more autonomy?
Aaron M. Renn
Aaron M. Renn is a writer, speaker, and consultant on state and local affairs. His web site www.urbanophile.com, started in 2006, has emerged as one of America’s premier destinations for serious, in depth, non-partisan, and non-dogmatic analysis an...Read More »
Stephen Lisauskas is a Senior Fellow for Urban Revitalization at the Pioneer Institute for Public Policy Research. During a 15-year career in local government, he held key management positions for Natick, Newburyport, and Haverhill, MA. More recen...Read More »
Day 1 – Opening Remarks
Since Republicans have had much success at the state level but little at the municipal one, disempowering cities can be politically appealing as a way to halt liberal policies. Democrats have always loved regulations and imposing mandates.
But this is a mistake. Local governments need more, not less autonomy. What’s more, micro-managing localities is hypocritical because states never cease to complain about federal mandates and meddling. It’s do unto localities as you hate the federal government doing unto you. Daddy does not always know best.
It’s the nature of laws to create uniform approaches. To the extent that states dictate policy, it’s likely to be one-size-fits-all. But the landscape of local government is extremely diverse. The needs of a major city vs. an inner suburban one vs. a small town, etc. are radically different. Existing rules that differentiate based on population classes of cities provide only a crude means of addressing this distinction.
The locus of the new economy is metropolitan areas. These are vast mosaics of jurisdictions that need to work together better, but each piece needs the freedom to differentiate itself. It’s axiomatic that specialization helps a football team to function as something greater than the sum of the parts; similarly each city in a region needs to develop its own role on the team and bring its “A-game.” Today’s marketplace is more segmented than ever, so cities need the freedom to target segmented markets in order to find ones where they may have a competitive advantage.
As Harvard’s Michael Porter put it, “Competitive strategy is about being different.” This requires freedom to chart a unique course. One way to accomplish this is through broad latitude for cities to obtain a self-amendable home rule city charter.
Cities also need relief from state mandates that hinder their ability to deliver services efficiently and effectively, especially legislation favoring public sector unions over residents. Its citizens, not its employees, should be a city’s constituency.
While state oversight and some limitations on taxation and the accumulation of unfunded liabilities is clearly warranted, in general cities need more, not less flexibility to be able to respond to market conditions.
Improving local government does not require more autonomy. Rather, we need (1) good management that (2) engages and informs the electorate in an open, transparent manner, which in turn (3) demands good government from its elected officials who then (4) create the context for even better management to thrive. Granting additional authority will not address these essential components of responsible governing. Absent good management, additional autonomy only papers over waste and dysfunction. It only accommodates it and allows it to grow into the space provided by the new authority.
In 2004 to 2005, the state-appointed Springfield Finance Control Board revamped the finances of the City of Springfield, MA. The City had posted deficits for 18 consecutive years. In its first year, the Control Board eliminated the City’s deficit and posted a $6.7 million surplus. In subsequent years, the Control Board broadly reformed the structure and operations of the City, but in all instances only exercised the City’s own powers. State government’s involvement in Springfield’s affairs was critical. But no changes to the city’s powers needed to be made to stabilize Springfield’s finances. A failed city government was reformed using the powers inherent in that city, but using them in a more progressive, thoughtful and responsible manner.
It may be necessary to expand local authority in specific cases to address certain unique situations. Perhaps, for example, a city should be granted the power to permit ward representation on its legislative body or lengthen a mayor’s term. By and large, however, expansion of local authority is not needed to effectively conduct the business of local government. The efficiency and effectiveness of local governments can be dramatically improved, not with additional autonomy, but with a focus on improved management and fostering the political context that permits it. Both of these can be driven by engaging the community in a truly democratic process that informs and involves the electorate in their government.
If cities like Springfield that approach fiscal collapse are most often restructured by exercising only their existing municipal powers, along with a temporary intervention by state government, it stands to reason that other, less distressed communities can also improve their efficiency and effectiveness using only their existing authority.
Day 2 – Rebuttals
Stephen calls for a culture of good governance and an engaged citizenry. Who could be against that? However, these items are largely unrelated to how many powers a government is allowed to execute. It’s also worth noting that emergency managers, control boards, and such do sometimes have extraordinary powers not available to city government. And that many localities have become captured by labor interests precisely because of the way state mandates empower them to all but forcibly collect dues for political activities.
However, this brings up a vital point in that autonomy can be measured in two dimensions: the degree of freedom from oversight, and the number and extent of permitted powers. These are distinct. A local government can be subject to little to no oversight from the state and yet have few powers as well. Similarly, broadly empowering local government is not inconsistent with a strong oversight function. In fact, providing such state oversight is important since constitutionally localities, unlike states, are not sovereign entities.
There are two ways to deal with the risk of bad governance. One is to limit the damage bad governments can do by minimizing their powers. This is, as they say, letting the bad apples spoil a good time for everyone. (It’s also the standard, all-purpose justification for regulation of business as an over-reaction to abuse).
Another method is to have a strong oversight and review function. Having strong state oversight of cities – such as by ensuring they are not accruing large unfunded liabilities – actually enables those cities to be empowered to do more, precisely because someone upstairs is watching. As long as the state oversight entity operates in a timely manner and is limited to matters of bona fide abuse such as financial mismanagement, not being a daddy-knows-best second-guessing function or way for the governor to impose his ideology on every locality in the state, I think this is actually the best way to safely enable localities to be trusted with greater powers to conduct their own affairs.
Specialization helps a football team excel, yes, but there are rules to a football game, and the players perform duties required of them by a central authority (the coach). Players are not free to do whatever is best for them or their fans.
Cities and towns do need to specialize to truly thrive economically, but this specialization is the tip of the iceberg. Success is built on a foundation of good government, of local services being delivered well, regardless of the region’s economic specialty.
Municipalities play critically important roles in our society. From public safety to education, public health, land use and transportation, cities and towns provide the conditions within which people and economies can succeed. These services, delivered effectively, are the most important precursors to economic growth. Focusing on the need for autonomy so municipalities can differentiate themselves largely misses the point. It also misses the point that this autonomy currently exists.
Think of Boston, a city in a state which grants comparatively little autonomy to its cities and towns. Boston has had a specialized economy for centuries, with current specialties in higher education, biotechnology and financial services. These areas of focus were developed over time and are possible because the region, though expensive, provides excellent core municipal services, with safe streets, good education and a high quality of life. The region has not selected this strategy. The market recognized the region’s strengths, was willing to live with its higher costs, and local governments – working with the Commonwealth – took advantage of these opportunities. All this was done in a region with comparatively little local autonomy. It can be done elsewhere as well.
But how have we done this with so little autonomy? We have done it by doing the “day-to-day” of local government effectively, by focusing on the iceberg, not the tip. We have not done it universally or well enough, but we have done it well.
Municipalities do not need the autonomy to pick winners and losers for our economy. Private investors – with much more information, expertise and motivation (read: money at stake) – pick wrong all the time. Focusing on the proper administration of local services will create the conditions for the market to differentiate itself based on the strengths in a particular community and its region. Many cities and towns do this today. We must continue to do it better and more broadly.
Day 3 – Questions from the Moderator
Stephen-Please speak directly to the union issue. Local government is the most heavily unionized “industry” in the nation. In blue states, where most of the recent cases of fiscal distress have been found, state laws on collective bargaining, binding arbitration, pensions, etc., plainly elevate the interests of unions above localities and their managers. Such laws restrict good management, and enable bad management, by giving managers an excuse to put off reform. Are you in favor of weakening pro-government union laws, to give local managers more flexibility, and, if so, does that not make you a proponent of local autonomy after all?
Aaron-Let’s talk about functions. At present, cities are responsible for public education, public safety, land use decisions, some infrastructure, and quality-of-life services such as parks and libraries. In making the case for more local autonomy, are you saying that cities should take on more functions—ones which are now performed by the state and/or federal government? Or is your point that they should simply face less regulation over those functions they currently perform? Please be specific.
Because the structure and powers of local governments vary so widely across the country, there’s no one-size-fits-all solution. However, in general, my belief is that local governments generally do not need to take on totally new functions. Rather, they need to be given the power, freedom, and funding to better manage existing functions.
As studies in places like Atlanta, Indianapolis, and Louisville have shown, urban core type areas routinely operate at a tax deficit in their states. The state takes in more money from them than it returns in spending. This becomes a problem when it makes it difficult for cities to take care of their own business.
Consider transportation. The feds collect money and return some of it to the states with various special-interest-backed strings attached. The states keep quite a bit of the remainder, plus raise funds of their own, which are disproportionately spent on rural boondoggles. For example, Ohio’s largest road project is a $440 million bypass of a town of 20,000 people. Comparatively little is suballocated to localities as of right, and those localities have few levers other than general taxation (property taxes) to raise transport funds. What’s more, if they do get money from on high, they must go through an onerous and expensive process to obtain it, and comply with design standards that are frequently inappropriate to developed urban areas. It should come as no surprise that our urban infrastructure is in such poor shape.
Core cities are also subject to financially-crippling unfunded mandates. For example, the largest public works project in most places today often flies under the radar. It is an EPA-mandated remediation of combined sewer overflows. This can be a multi-billion dollar expenditure. For the most part, combined sewers exist for historical reasons and were environmentally-friendly solutions at the time they were introduced. (In an era of horse-powered transport, dilution was the solution). Cleaning up our water is a good thing, but there is absolutely no cost-benefit analysis for this, and generally no funding provided. It is an absolute mandate that hugely disadvantages cities that have the misfortune of being older and which are already struggling with legacy costs.
The very administrative structure of cities, and their various revenue funds and how money must be allocated are often specified as well. In the Comments below, Chris Barnett gives a perfect illustration of this kind of state micromanagement in Indianapolis.
In short, funding levers and control should be devolved (at least partially) in many cases, unfunded mandates significantly curtailed, and cities should be able to control their administrative structure, form multi-jurisdictional compacts, etc. without having to get permission.
While I agree that state laws regarding collective bargaining can elevate the interests of employees above those of taxpayers, this is not a necessary result of these laws. I have seen – and experienced – these laws being used effectively by good managers and leaders to do the “impossible”: to discipline and terminate employees, adjust the cost of public services, and cut benefits.
The real issue is what I referenced previously – management and politics. Collective bargaining laws establish rules that management and labor must follow to establish compensation levels and working conditions. This is not inherently a bad thing. As we find in many areas of government, however, these laws create vested interests, and vested interests work to “capture” the government to promote their ends. In the same way that pharmaceutical companies push for government action – or inaction – that benefits them and defense contractors convince members of Congress to fund defense systems that no one wants, unions are a vested interest.
Politics allows labor to too-strongly influence the management side of the bargaining table. The ability of labor to vote and fundraise for specific candidates provides them control not afforded to residents and taxpayers, whose interests we assume are being pursued but, lacking lobbyists or bargaining agents, are too often given subordinate consideration. The problem is not collective bargaining per se, it is the political problem of vested interests.
Good management provides residents and taxpayers active representation in their government by actively involving them in it. “Adult discussions” are held regarding trade-offs about revenue, spending, capital needs, and the costs and benefits of each. Are wages and benefits too expensive to allow us to fund a desired service? Should we raise more revenue, reduce compensation and benefits, outsource a service, reduce our workforce, or not provide the service at all? These discussions will help develop the political will to take prudent action.
There are instances of gross unfairness and many instances in which unions pressure elected officials for higher compensation and more benefits, only to turn around and fight against funding these benefits in order to hire more employees. This compromises the fiscal stability of the government. This is a problem, but one that required management to agree to it, originally. These problems are not necessary outcomes of collective bargaining laws; they are outcomes of poor management and/or poor politics conducted without sufficient disclosure to the public.
Am I a proponent of local autonomy? Absolutely. But I also believe that management needs to better use the tools they currently have. I and many others have used existing powers to put the interests of residents and taxpayers first. Changing laws to eliminate collective bargaining could help, but is not absolutely necessary. It will also fail to prevent the same problem from occurring in every other area of government where vested interests seek to take advantage of taxpayers.
Day 4 – Closing Remarks
Clearly it is difficult to isolate the matter of local government autonomy from all of the various surrounding factors that lead to civic success or failures. Items such as regional vs. fragmented jurisdictions, unitary governments vs. special purpose districts, good governance, and so much more all play a role.
But cities, predominantly larger cities and regions, do need more empowerment.
They have the staff capacity to do it, are generally net tax donors, and crucially have major media outlets that hold mayors and such accountable. They also have a need to invest heavily in infrastructure to remain competitive. Among the powers they should receive are the abilities to reorganize administratively (such as by a self-amendable city charter), forcibly consolidate non-general purpose entities in their jurisdiction (e.g., mayoral control of schools), and have much greater funding leverage devolved for transportation and infrastructure spending. There should be an end of unfunded mandates and pro-union laws as well.
Generally today larger cities already have more power due to the “classes” of cities. But they often have limited financial power compared to their states. Virtually all income, sales, and gas taxes flow first into state coffers, and a lot of federal aid is likewise routed that way.
In return, there should be caps on debt and taxation levels, with exceptions requiring the approval of the voters. States should be able to review and disallow financing transactions such as complex derivatives, cash out refinancings (which is how Indianapolis owed more on the Hoosier Dome when it was demolished than it cost them to build it in the first place), or interest-only types of debt. Keep in mind, however, that in some cases cities resort to these gimmicks precisely because they are limited in other ways to raise funds. For example, Indianapolis sold its water system to raise funds for infrastructure at the same time state was spending untold billions of dollars on a number of highways that are of marginal value at best.
To pick an area to start, I suggest transportation, where significantly more funding should be suballocated to localities instead of the state DOT. The Metropolitan Planning Organization in urban areas provides an existing entity that already operates at regional scale through which to start doing this. Urban center areas should be exempted from highway design standards created for greenfields. Do these two, and then expand from there.
The responsibilities placed on cities and towns are broad and significant, directly impacting the lives of every resident in every community. Given the dysfunction we find in our federal government, there is a natural tendency to ask those who do well to do more. That would be a mistake.
Providing more autonomy to cities and towns to work in new areas risks compromising their ability to focus on and deliver core services well. In communities that are functioning poorly, more autonomy is the last thing they need. In all instances, we should focus on providing the most effective, efficient services possible to the public, and that should be the focus of all governments, regardless of how effective they currently are.
Even in the worst-governed municipalities, experience shows that the vast majority of the public wants an effective, efficient government. Experience also shows that the level of public safety and public education in a community are core drivers of that municipality’s success. Regional issues may eventually be implicated but those are often problems of already-successful cities and towns.
We should focus on helping all of our cities improve services, not on diluting their effectiveness by providing them more autonomy to compensate for the fact that other governments have become less effective. That would not solve the real problem – dysfunction at other levels of government. Those problems should be solved by solving them, not by shifting responsibility to another level of government, all while risking the success local governments are achieving today, with only the hope that dysfunction does not spread to them as well.
Where additional autonomy is needed, it should be considered on a case-by-case basis. There is not a broad need for more autonomy, nor is there a call for it. There are numerous examples of cities that succeed greatly using their current autonomy. How have they done this and what can we learn from it? There are exceptional examples of states and cities partnering to address specific needs and opportunities – education reform in Massachusetts; Albany-area nanotechnology development in New York. Instead of focusing on providing broad new autonomy to cities – some which will use it well, some which will sacrifice management and leadership focus in other important areas to pursue it, and some which may misuse it – we should renew our focus on doing the day-to-day well. At the same time, we can work to develop consensus on the need to address the specific issues that need to be addressed regionally. This is how every regional solution has been developed – there was a need identified, negotiation and discussion occurred, and a solution was reached. It takes hard work, but that’s governing.
Aaron M. Renn
Aaron M. Renn is a writer, speaker, and consultant on state and local affairs. His web site www.urbanophile.com, started in 2006, has emerged as one of America’s premier destinations for serious, in depth, non-partisan, and non-dogmatic analysis and discussion of the issues facing America’s cities and regions in the 21st century. He has been featured by the New York Times, the Wall Street Journal, and the Economist, and his writings have appeared in Forbes, the New York Times, and City Journal. Aaron’s insights are rooted in a 15-year career in management and IT consulting, where he was a partner at Accenture. He is also the founder of civic data analytics firm Telestrian.
Stephen Lisauskas is a Senior Fellow for Urban Revitalization at the Pioneer Institute for Public Policy Research. During a 15-year career in local government, he held key management positions for Natick, Newburyport, and Haverhill, MA. More recently, Stephen served as Executive Director of the Springfield (MA) Finance Control Board, and helped move that city from 18 years of deficit to five consecutive years of surplus, leaving more than $64 million in reserves upon the departure of the Board. He has led or participated in four municipal turnarounds, including the bankruptcy restructuring of Central Falls, RI. He holds two degrees from Syracuse University, a BS in Political Science and an MPA from the Maxwell School of Citizenship and Public Affairs.