When Cities Are Too Generous

Source: Andrew Thompson, Next American City, Wednesday, May 27th, 2009

Budget season is here, which means jettisoning the long-term strategies birthed in the idyllic days of budgetary prosperity. Or if not jettisoning, at least reconsidering. Expansion of public transit gives way to finding drivers, youth monitoring programs disappear and are replaced by the tried-and-true method of jailing, and plans to plant trees are replaced by the realization that we had enough trees all along. And taxes, the lowering of which is the cornerstone of any city’s long-term growth strategy, stop their declines or return to the higher levels they knew before “tax relief” entered the lexicon of strategists’ vocabulary.

Obviously, backtracking on the tools used for growth is something no city wants to do, but it’s good time for cities to wonder if they overshot their tax abatement programs the whole time. It’s easy to look at growth in a city, then look at the tax abatement program and decide that one wouldn’t exist without the other. Largely, it’s often true, but that doesn’t mean growth would only have occurred with the programs in their current forms. It’s important to reevaluate equilibriums to maximize benefit, and if cities can make more money without hampering growth, this is the time to figure it out. Right now, an overly generous tax abatement looks like a city throwing money into the streets standing out the sky roof of a limousine, even though that limo is about to be repossessed.

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