I have had really high hopes for Michael Nutter as Mayor since the primary in May 2007. But along with those hopes, I’ve had a nagging worry since October 2007.
That’s when Mark Alan Hughes, who once served as a policy advisor to the Nutter campaign and is now the sustainability director, published two deeply disturbing columns about his vision for the future of the city. You can read them here and here.
At the time he published those columns Hughes did not work for Michael Nutter. And I had heard Nutter speak enough during the campaign to feel confident that the then future Mayor did not share the ideas found in those columns.
But, in the last few weeks, I’ve started to worry that maybe what Hughes wrote reflects the policy of this administration. I’ll explain why in a moment. First I have to present Hughes’s vision for the city.
The premise of Hughes’ political program is this: The City can do little or nothing to raise the prospects of the million residents of the city who are member of the working class or poor. The task of lifting up the quarter of the population who are poor, or giving the sons and daughters of the working class a decent education, or improving the quality of life in poor and working class neighborhoods is beyond the resources of the city to address.
Much of this city operates as a warehouse of America’s greatest failings. Chief among which is poverty. Hundreds of thousands of Philadelphians are mired in poverty and the related web of poor health, lousy education, no work and chronic violence. One in four Philadelphians is officially poor, which is very poor indeed: about $20,000 for a family of four.
In this regard, the mayoral campaign of Rep. Chaka Fattah was focused on the right problem but the wrong job….
The resources required to fix those failings are so far beyond the capacity of Philadelphia (and the region and the state) that it is lunatic to act as if any mayor matters to our biggest problems.
Hughes doesn’t say that we can’t reduce poverty and give everyone a good education or revive business in our commercial corridors.
But he does say that we can’t do these things with the resources of the city. Those tasks can only be accomplished by the federal governments, which of course, have shown no inclination to do so since, roughly, 1965.
While we can’t do anything to relieve the very real agony of a million of our citizens, we can and have done a lot for the group Hughes calls the “happy 500,000.” These are the mostly but not entirely white middle class residents of what we instinctively recognize as the best neighborhoods in the city: Center City and the gentrifying neighborhoods to the north, south, and west, Chestnut Hill and West Mt. Airy, Overbrook and a few others.
These areas of the cities and, especially, Center City are thriving. Indeed, Hughes says that
Center City may be the best downtown in North America, possessing a live-and-work density that other places can only dream of. University City is emerging as a knowledge hotspot of global stature.
As these merge into a single place over the next decade, united rather than divided by the Schuylkill, greater Center City may expand from a good 100,000-person place into a great 200,000-person place.
But while
Philadelphia is a city in which perhaps half a million people are able to enjoy life, liberty and the pursuit of happiness. But there’s another million or so Philadelphians whose prospects grow dimmer every year – half of whom are poor or nearly so, while the other half cling precariously to a living earned in a declining economy.
This is depressing enough. But what is really disturbing is Hughes’ claim that the success of the parts of the city that serve the “happy 500,000” depends on not trying to help the miserable million.
Here is why.
The happy half million are thriving because middle class people are moving back to the city and bringing with them high end shops and services. They are coming back to the city for a number of reasons which Hughes does not fully explore. He doesn’t mention, for example, the cultural shift on the part of educated people in favor of urban life. He does point out, however, to the impact of the relatively low housing prices in the city and the recent reductions in taxes.
Hughes, however, is no supply side economist. His strategy is not just the conservative one of reducing taxes in the hope of bringing new businesses and middle class people into the city. Hughes does not believe that government stands in the way of economic development. Indeed, he fully recognizes that, as progressive critics of tax cuts have consistently pointed out, public services are critical to the future of the middle class in the city.
The happy 500,000
1. need good schools because the most important thing to the middle class is that its kids remain in the middle class and the ticket to doing so is a good education.
2. need investments in commercial corridors—clean streets, good signage, good sidewalks and lighting—because the good shops that middle class people like won’t exist without them.
3. need libraries, recreation facilities, public transit, and other amenities of urban life.
The city has to provide these goods and services. And here is where we come to the critical element of Hughes’ vision. The city has found a way to decouple the provision of public goods to the middle class from the provision of these goods to the poor and working people. And this has to happen because the city has to provide these goods to the right neighborhoods without providing them to every neighborhood, simply because it can’t afford to provide them everywhere.
How does the city do this?
1. It provides good education to the happy 500,000 but not to everyone else. Partly this is accomplished by our independent schools. But is also attained by funding selective schools such Central and Masterman more than neighborhood schools; by providing well funded charter schools in the middle class neighborhoods; by funding neighborhood schools in the right neighborhoods more than in the wrong neighborhoods; and by instituting policies such as the preference for Center City children in Center City public schools.
2. It allows the good neighborhoods to raise taxes on the businesses within them by creating special service districts. The city as a whole is filthy but Center City is kept clean by the Center City District. Similar special service districts keep Chestnut Hill and Mt. Airy clean. It turns out that business taxes are not “job killing” when they used solely for the purpose of benefiting the neighborhoods in which those businesses are found.
If we expand Hughes’s argument a bit we will also see that this strategy also ivolved
3. Better funding all city services where the happy 500,000 live than where the miserable million live. No one who has traveled the length and breadth of this city as I have would be surprised if a close examination of every part of the city budget shows that, on a per capita basis, much more money is spent for basic city services such as sanitation, police protection, fire protection, and education in upper middle class neighborhoods than in poor or working class neighborhoods. Indeed we would be surprised by any other result.
4. Focusing public investments on those things most attractive to middle class people, such as the arts (the Kimmel Center and the bond issue for our arts institutions); sports stadia; and the central library (with the new $130 million building coming soon.)
5. Supporting gentrification. If we want more middle class people to move into the city, we have to keep housing costs reasonable. And we can’t do so without reclaiming neighborhoods from working class and poor. That means pushing working class and poor people from the neighborhoods immediately adjoining Center city.
In addition, while tax cuts are, for Hughes, clearly good for the city, for decoupling strategy to work, it is critical that they be focused on the right people as well. The ten year real estate tax abatement is the most dramatic example of a of tax reduction that, for Hughes, benefits the happy half million but not the miserable million. The failure of the city to correct the unfairness of our property tax, which in effect taxes working and poor neighborhoods at higher rates than those of middle class neighborhoods, can be seen as part of this strategy as well.
While the strategy of reducing business taxes might be thought to be class neutral, when the vast majority of businesses are located in middle class neighborhoods and the city is not making the kinds of public investments needed to encourage new and better businesses in working class and poor neighborhoods, BPT reductions turn out not to be class neutral either.
Wage tax cuts are class neutral on a percentage basis. But reductions in a flat tax provide far more income to the wealthy than the poor. A partisan of the decoupling strategy would also fight any attempt, such as the Cohen wage tax rebate, to make the wage tax more progressive. Hughes not only opposed the Cohen wage tax rebate but also ridiculed those of us who tried to save the wage tax two years ago.
What the decoupling strategy does for the city is nicely summed up by Hughes this way
we’ve spent the last decade attracting the affluent by reducing their social liability for the rest of the city to a level roughly equal to the liability felt in the suburbs and Harrisburg.
And what should the “rest of the city,” the miserable million do when the happy 500,000 gone on their merry way? Hughes strongly suggests that many of them should simply leave and move to areas of the country where their prospects would be better. He does not say how they should get there.
Now, if you believed in the decoupling strategy, what would you do in fiscal crisis?
Well, you would be sure to focus all of your reduction in public services on working class and poor neighborhoods while not touching those in affluent neighborhoods.
You would not even consider raising taxes on the happy 500,000.
And you wouldn’t try to enact these cuts through an open, transparent, participatory budget process because in a democracy you couldn’t defend your budget cutting strategy in public.
Look at a map of library closings. Is it a product of the decoupling strategy?
Does the decoupling strategy explain why no one in city government seems to be discussing reducing the real estate tax abatement or converting the wage tax into a personal income tax or delaying the wage tax cuts that gambling revenues support or moving to a land tax, or finally instituting true reassessment of property in the city?
I hope that I am being alarmist in setting out the views of Mark Alan Hughes next to the response of the administration to the fiscal crisis. I hope that, as we move away from the initial shock of the budget crisis, the Nutter administration will adopt the transparency and openness we expected. I hope that as we understand the rationale for the Nutter cuts, we will see that they make sense to the whole city. I hope the faith so many of us have in Michael Nutter will be vindicated.
But right now, having re-read Hughes’ articles yesterday, I have to say I’m a little worried.