Monday, October 6th, 2008
In a major article [no longer online], the Indianapolis Star compares city spending there versus aspirational peers – Portland, Seattle Denver, and Charlotte – and finds that while those other cities value parks, transit, and the arts, Indy primarily values small, frugal government. This is hopefully the start of a valuable community conversation about what the city wants to be and where its priorities are and should be. While blogs are good for some things, it takes a major daily like the Star to put this in front of the community as a whole. However, this will probably amount to nothing if the Star doesn’t keep the conversation going, and there were a few weaknesses in the article the compromises its effectiveness a bit. Let’s hope this is the first of a series.
The article backs up what I’ve previously said, namely that Indianapolis does not prima facie appear to spend an outsized amount of money. The property and income tax fiascoes are legitimate and serious problems. However, the total spending levels are actually less than many other places. While Indy spends about the same on policing as the cities examined, it spends far less on other city services. At $1420 per capita, Indy’s spending is half of the western cities and even 25% less than Charlotte. Portland spends 5x what Indy does on parks, and has twice as many park acres per capita on 1/3 the land. Denver spend $462 per resident on transit and has a brand new 119 mile rail system. Indy spends $80 per resident and has the 99th largest bus system in America, with chronic funding and operational problems. Charlotte spends three times what Indy does on the arts, and you’d better do that math now because in a couple more years it will give you a divide by zero error.
Do taxes and spending matter when it comes to attracting business? You bet. Lean, efficient government that effectively delivers the service levels it promises is absolutely critical. But in the modern era, low cost doesn’t mean what it used to. Indiana used to be a low cost business location. Now, in competition with countries where labor is pennies per hour, Indiana will never be a low cost business location again. Globalization is eviscerating the traditional twin engines of the Hoosier economy, manufacturing and agriculture, and they are never coming back to the way they were. The 21st century economy will be very different from the 20th. Indy is pinning a lot of its economic hopes on the life sciences industry. But you can’t have a life sciences industry without life scientists. The 21st century labor force is one that is in high demand. The highly educated workers in bioscience, technology, etc. have choices about where to live. They want to live in communities that share their values and ambitions. They don’t want to live in cities where the neglected parks sit surrounded by rusting chain link fences, where a creaky bus system means no real transportation choices, where crime is rising, schools declining, and there are no plans to fill pothole ridden streets.
Now the article overstates things a bit. Most unfairly, it cites a $280 million Seattle library capital plan, without acknowledging the major expansion the IMCPL just completed. Indy may not have a Rem Koolhaas – and given the site of the library, thank goodness – but it does have a very nice, functional new addition. Indy actually has a pretty good library system in many respects I think. And the article fails to mention the $1.1 billion new airport terminal that is opening and, above all, the elephant in the room, sports and conventions. I’ll bet these other cities don’t spend that much more than Indy on these businesses. And, while one can question their cost effectiveness or desireability, clearly both have been key to Indy’s success.
Indianapolis may in fact be the northernmost Southern city. In many respects, that is true. Locals know that to some extent I-70 is the real Mason-Dixon line. But, as I’ve noted before, the South is booming. And I doubt you’d find most Midwestern cities of similar size have spending that much different from Indy. They are all pretty much in the same general state if you ask me, something I’ve tried to highlight with this blog.
But the question remains. What does your community want to be, whether you are in Indy or elsewhere? Do you want to play in the 21st century game? Or do you want to try to hold on to the old ways of doing things, buckle down, and pray you are a survivor? Clearly, smaller cities can’t choose to do it all. They have to pick and choose what they want to be. Trying to turn into Indy into some type of San Francisco like tax and spend republic would be a recipe for disaster because the Midwest does not (yet) have the built in appeal of places like that. The key is to figure out where you can play and where to carve out your niche. And to make sure that you don’t get left behind when it comes to the “new basics”. Government services aren’t static. They evolve over time and the goods we expect our governments to deliver grow as a our society grows. At one time cities didn’t have fire departments. It wasn’t too long ago that they didn’t care about clean water. Today, providing the amenties needed to compete in the global economy requires new thinking. I can’t say exactly what the new must-have services might be. Is it transit? The arts? Something else? We’ll see. But if you don’t place a few well-chosen bets, you are guaranteed to lose out.
Part of the problem in Indianapolis and other places is that giving money to the city can easily be viewed as pouring money down a rat hole. As property taxes spiraled, services were degrading. Why would anyone want to pay more for that? There are some key principles that need to be adhered to. One is clearly separating the desired service levels from how to deliver that service most effectively. Those are completely unrelated questions. First decide what car you want to buy that fits your general budget, then go dicker with the dealer. Next, there must be a clear linkage between outputs and inputs. When more money flows into the government’s coffers, more services need to fall out the other end of the pipe. If the city can’t draw a linkage between money in, services out, and can’t explain away variances, the public will never have the trust necessary to give the government more money even if it wants the services. How will it know it is getting anything for the money?
As the article cites, Lucas Oil Stadium is a model. Many people didn’t like the deal and some still don’t. But on the whole the community seems to think it was a good idea. But most importantly, when the Lucas Oil tax increase went in, the city got a brand new stadium it can see and touch for its money. There is a tangible, real linkage between that tax and the output. Perhaps people would be willing to support a transit tax on that basis to. Implement a regional transit tax, first by enabling legislation, then by the opt-in of the counties, and link it directly to the increase in service that results. That way the debate is squarely about the desireability of the outcomes, not about more money for an amorphous government agency.
This article also highlights the challenge facing Mayor Ballard. He’s gotten hit with a financial tsunami. Indeed, absent that maelstrom, he wouldn’t be mayor today. But he’s also reaped where he did not sow. He inherited the library, Lucas Oil Stadium, the Cultural Trail, the new airport terminal, and to a lesser extent the Super Bowl. He’s had a lot of ribbon cuttings to attend. But now the pipeline is about dry. What is his legacy going to be? Clearly, his major legacy needs to be financial. If he puts the city’s house in order operationally and financially – no small feat – he’ll deserve the thanks of the citizens for years to come. The city can’t even think about taking the next step in services until it gets back on a solid base. Indeed, he has already had huge success in that he got the state to take over the ticking time bomb of the unfunded police and fire pensions, pensions that would have ruined the city in the long term.
But ultimately I don’t think just fixing the leaks in the fiscal boat and dealing with administrative paralysis is going to be sufficient to take the city forward. Indianapolis was successful with its previous strategies largely because it was forward thinking and put the key elements of success in place before they were needed. Building the Hoosier Dome was the best example. Without having done that with no team, the Colts would not be in town today. Where does the city go next? How does it differentiate itself? The time is past due to reseed the pipeline of major civic initiatives. The city can’t do it alone. But the city has never done it alone. Business, academic, and citizen groups have long been a source of strength. But the city can’t just punt to them.
I know I’ll catch flak for this because I always do, but the city needs to take a look at what Carmel is doing. Carmel realizes that its true competition isn’t the north side of the city or Greenwood. It’s true competition is Naperville, Illinois and the nicer suburbs of Atlanta. To build a desireable location for business, it has to have a desireable location for the executives of those businesses to be in. Hence its development strategy based on high service levels, new urbanism, neo-Colonial architecture, etc. The Carmel example should not be copied verbatim of course. I don’t even personally like faux Georgian architecture. But they are the poster child for a strategy led civic development strategy, and at least trying to respond to the modern economy. That’s why other suburbs in the region are upping their game. They see success and want to emulate it.
In the globalized new economy, it is generally core cities that have been prospering. Indy has made huge strides in its downtown and key northside neighborhoods. Its ethnic diversity is on the increase. But it hasn’t taken its place in the urban boomtowns yet. I don’t believe they city has to take a back seat to the suburbs or to any place else, though obviously it will need to take a different path from places like Seattle. But to truly be competitive for the future, the city needs to be ready to get in the game. Part of that is likely to involve spending some money on targeted new services, delivered efficiently and reliably. Best of luck to Mayor Ballard in stepping up to the challenge.