Try to pay the bills when half the house doesn't contribute.
UrbanTools Highlights Harrisburg's Resilience During Unprecedented Fiscal Challenge
Last week, the parent organization of UrbanTools – the Center for the Study of Economics (CSE) – assisted the Council of Georgist Organizations to illustrate the real-life positive impact that land value taxation can have even on the most distressed of urban areas.
CSE Director Josh Vincent guides tour of Harrisburg's mix of public and private places. (City Island) photo credit: Scott Baker
The opening of the week-long conference was opened by current Mayor Linda Thompson, addressed by Pennsylvania Auditor-General Jack Wagner (former Pittsburgh City Council President and LVT advocate)and closed by former Mayor Steve Reed. Harrisburg has been a good example of the effect land value tax can have upon the city since 1975. The city has continually tried to provide "value added" public assets such as parks, tech schools and colleges, housing and health centers to battle urban problems by creating value - land value - and letting the market pay for the investment in buildings.
Expanded over the years, Harrisburg permitted LVT to raise revenue from non-mobile sources in preference of a tax on land values which now exceeds a ratio of 6 to 1. Recently, Harrisburg has made news like many cities, due to skyrocketing expenses and unchanging revenues. Harrisburg has entered the realm of distressed city status called Act 47 in the state of Pennsylvania, which hands financial supervision of the city to a state appointed receiver.
Harrisburg's Act 47 plan – written by an out-of-state consultant – put Harrisburg taxpayers on the hook for a multitier pile of financial responsibility leading from the city and Dauphin County all the way to the governor's desk. All of this in a city where the county and city governments take up nearly half the assessed value of property and are thus exempted from contributing to the city’s coffers.
Luckily, city leaders, CSE and citizens from the neighborhoods made a strong case to preserve LVT and otherwise modify the hit that the city would've taken.
The relatively poor (and Democratic) city has become a plaything of both Wall Street bond traders and a Republican-ish governor and assembly who seem more motivated in scoring points from a city in trouble, rather than arriving at the plan that satisfies all parties. This is no time for parties, but action.
Harrisburg's troubles stem from a common problem in many states, but a particularly acute one in Pennsylvania. For 200 years, urban areas where the lifeline for rural areas and townships; once the postindustrial era wreaked havoc in the 1970s, suburban and rural interests consciously chose to throw their former benefactors over the side. Yet, the ship is still sinking.
Reconciliation and cooperation ought to be the order of the day, yet that appears to be bad politics in the ironically named "Commonwealth." UrbanTools is confident that any city, old or new can take advantage of the economic rents that exist beneath all the infrastructures, individuals and social structures that thrive above them. Like the new cities conceptualized by Paul Romer, Harrisburg and other communities can dig themselves out of a hole by searching for the revenue sitting unused under their feet.