How muniland sees cities
Alisha Green of Sunlight Foundation is working on a project to identify the ways that different types of data are used to describe cities. She put up a great post that sketches out a number of ways to view a city demographically, including population density, unemployment and housing. She asked me recently to write about how I personally view cities. I think of cities almost entirely as cash flow machines that collect taxes and provide social services. That is muniland. Here are Alisha’s questions and my answers:
1. From your point of view, what is a city?
Cities are legal entities that are incorporated to provide essential services; especially police, fire, education and water and sewer systems. Depending on the state, cities have legal authority to enter contracts, collect specific types of taxes and maintain judicial systems. Many cities also provide more expansive social services including care of the elderly and disabled and maintenance of parks and hospitals.
2. How have cities changed over the last 10 years?
Many cities saw strong revenue growth from the real estate bubble that began about 10 years ago. Then revenues flat-lined as housing prices plummeted. Generally, about half of local revenues come from property taxes, so budget adjustments have been widely necessary. Also, pension payments have become an increasing drag on city budgets, so other spending has been curtailed. Some well-positioned cities like San Francisco have seen great growth, while others like Cleveland have seen a lot of emigration. Cities are living, breathing entities which evolve in many ways. I think cities are becoming increasingly attractive places to live and work, compared with suburbs or rural areas.
3. What kinds of open information or open access do you rely on, professionally and/or personally?
The most important data set for the municipal bond space is the MSRB’s EMMA system. This is a platform that collects all the bond documents and financial statements for U.S. cities, states and other public entities. The system is free and open to all citizens who have an interest in the financial condition of their city, county or local school district (which are in many areas a separate legal entity). Cities are required to annually publish a CAFR (Comprehensive Annual Financial Report). CAFRs are an audited roadmap to the health of a city’s finances. In the bond space we use these documents to judge the relative creditworthiness of various entities.
4. What do you think are the biggest opportunities and challenges that cities face?
Cities have great opportunities to create ecologically sustainable communities that are incubators for jobs. Cities are often rich in cultural, medical and educational resources. If well governed, they can respond quickly to economic and demographic changes.
In terms of challenges, effective and efficient cities must operate transparently and challenge special interest groups who seek to carve out special preferences. It’s best when citizens have access to basic data about how taxes are collected and spent. Increasing payroll and pension expenses for public workers are crowding out other spending. Local governments must increase efficiency and review the effectiveness of the services that they provide.
5. What’s the biggest change you see happening now in cities and how does public attention relate to it?
It seems anecdotally that cities are becoming much more green and livable than they were in the 80’s and 90’s. New York City has banned smoking in public, added pocket parks, is adding more bike lanes and has bought natural gas-powered city buses and has mandated this for taxis. Cities have also been very active in trying to improve schools. These are changes that citizens want and they make cities very attractive.