Local Government – Page 29

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I’m not ready to move on from the subject of yesterday’s post, which was triggered by the efforts of numerous cities to lure Amazon’s second headquarters.

Let me just share two additional observations, one from a recent study reported in Governing, and one emerging from a recent argument in Indianapolis’ City-County Council.

The Governing article shared a study done by the Urban Institute.

In choosing New York and D.C., Amazon opted for two cities that have led the economic expansion since the end of the last recession in 2009, far outpacing the rest of the nation in job growth. The decision drew the ire of politicians at the state and federal levels, along with others who had called on the tech giant to place its second headquarters in a city where it could play a more transformative role in the economy.

Yet a new study from the Urban Institute suggests that landing such a large corporation isn’t actually the best way to build a local economy and spur job growth.

If give-aways massive enough to “steal” large employers–to lure them from City A to City B (in what certainly seems to be a national zero-sum game) isn’t a sound growth strategy, what is?

Instead, the report says, cities should focus on growing existing local firms, not trying to lure out-of-town companies and poaching firms from other cities. “Most job expansion and contractions come from birth and deaths of homegrown businesses or expansion or contractions of existing home-based businesses,” says Megan Randall, a research analyst with the Urban-Brookings Tax Policy Center and a co-author of the report.

According to Randall, when so-called “marquee companies” locate in a new city, they tend to displace existing businesses, especially mom-and-pop stores. Supporting and expanding homegrown enterprises has been a more successful strategy for adding job growth.

Worse, giving up tax revenues to lure a new company puts a strain on local services, particularly schools.

As New York University business professor Scott Galloway put it in an email to Barron’s on Tuesday, the tax incentives from New York amount to “an elegant transfer of funds from municipal school/fire/police districts to Amazon shareholders.”

Cutting into services and school budgets makes the local workforce less attractive in the long run, and the location less alluring, the Urban Institute report notes….

Cities would be better served, according to Randall and other economic policy analysts, by improving schools and public services, and focusing on nurturing their existing network of businesses.

When a city offers tax giveaways to lure a company, the government goes into the negotiation with a marked disadvantage because of what economists call “information asymmetry.” The city doesn’t have all the information about what the company is looking for. In some cases, a company may choose a city it would have moved to anyway, pocketing the tax incentives even though they weren’t a deciding factor.

“Firms are in a advantageous position,” Randall says. “They know cities want to attract jobs and create opportunities for their residents. They know they are in the position to leverage a public benefit from what they have to offer.”

What the article calls “negotiation” is more often–and more accurately–described as extortion. And that brings me to a recent dispute in Indianapolis’ City-County Council.

Corteva is a company formed last year, as part of Dow Chemical’s mega-merger with DuPont. Delaware-based Corteva—which includes the local operations of Dow AgroSciences—is set to be spun off as a public company in June 2019, and it employs about 1,400 workers in Indianapolis.

The City-County Council approved 30 million dollars to “incentivize” the company to maintain operations in Indianapolis. Most Councilors weren’t happy about it.

The incentive deal authorizes the issuance of $30 million in economic development revenue notes to Corteva from the city of Indianapolis, which would be paid back with about $5 million annually in tax increment financing funds that the city had been passing through to government units such as schools, libraries, parks, police and fire protection. Those entities would no longer receive those funds while the notes are being paid off.

The council voted 18-7 to approve the deal. Democrats Zach Adamson and Stephen Clay voted against the plan as did Republicans Jeff Coats, Danielle Coulter, Janice McHenry, Jefferson Shreve and John Wesseler.

Even council members voting yes weren’t happy.

“It’s not the best deal; I’m not excited about it,” said Democrat Jared Evans. But he said the long-term benefit of keeping the jobs in the community outweighed the short-term harm to the taxing units.

Zach Adamson characterized the incentives as “nothing short of extortion;” he was exactly right. Far too much of what passes for “economic development” is better described as bribery and/or blackmail. “What will you pay us to come?” and “What will you pay us to stay?”

These deals steal money that would otherwise be used to improve the local quality of life. And as the Urban Institute study reaffirmed, the quality of life–good schools, good parks, convenient transportation, effective public safety, etc.–is what really drives job growth and economic development.

When you rob Peter to pay Paul, you just make both of them poorer.

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Blue City, Red State, Home Rule

In the wake of Amazon’s choice of location for headquarters #2 (and the announcement that it was breaking the choice into two, one to be located in Queens and one in Crystal City–essentially, Washington, D.C.), Robert Reich wrote a provocative essay for Newsweek.

What does Amazon’s decision have to do with America’s political tumult? Turns out, quite a lot.

Amazon’s main headquarters is in Seattle, one of the bluest cities in the bluest of states. New York and metropolitan Washington are true-blue, too.

Amazon could have decided to locate its second headquarters in, say, Indianapolis, Indiana. Indianapolis vigorously courted the firm. It’s also a Republican city in a bright red state.

Actually, Indianapolis–like every other sizable city in the country–is unambiguously blue. But we are located in a very, very red state.

Reich’s main point was that technology is a process of “group learning,” and it advances best in geographical clusters. Those clusters are primarily found along the coasts, where the digital economy has been a real boon. But Reich says that economy has left behind much of the rest of the country, with the result that we are facing what he calls “the widening inequalities of place.”

As money pours into these hubs, so do service jobs that cater to the new wealth—pricey lawyers, wealth managers, and management consultants, as well as cooks, baristas, and pilates instructors.

Between 2010 and 2017, according to Brookings, nearly half of the America’s employment growth centered in just 20 large metro areas, now home to about a third of the U.S. population.

Relative to these booming hubs, America’s heartland is becoming older, less well-educated, and poorer.

I think the reality of “America’s heartland” is more complicated than Reich recognizes. And that takes me back to his mistaken assumption that Indianapolis is a Republican city.

Cities in even the brightest red states have been blue for some time. We form what has been dubbed an “urban archipelago.” Furthermore, the inhabitants of these cities are engaged in a multitude of creative place-making, job-creating and poverty-reducing efforts.

Here in Indianapolis, for example, Community Development Corporations partner with the City, the Chamber of Commerce and a variety of nonprofit organizations to improve transit, health, education and job training, and to remove barriers to self-sufficiency. People may disagree about the likely efficacy or unintended consequences of this or that initiative, but the range of activity–and the good will motivating it–is impressive.

Indianapolis’ problem (which is not shared by every blue island swimming in a rural sea of red) can be found in Reich’s second descriptor: our red state. It isn’t Republican control of Indiana that’s the problem; it’s the fact that we are a state in which there is no meaningful home rule. Public officials in Indiana cities must go hat-in-hand to the state legislature (currently governed by an unimaginative GOP super-majority) to pursue many of the policy initiatives that other cities have authority to pursue as a matter of course.

Want to charge extra for plastic bags? No can do, sayeth our legislative overlords. In just the last few years, the Indiana legislature has also prevented cities from setting local minimum wages, and from regulating housing, agricultural operations and worker schedules, among other things.

Perhaps the most egregious example of legislative arrogance involved Indianapolis’ proposal to tax ourselves to upgrade our inadequate transit system. It took three years just to get the legislature’s permission to hold a vote on the matter, and even then, the enabling legislation prohibited us from considering light rail. Why? Who knows?

As a column in the Indianapolis Star noted,

A move to preempt local rules for services like Airbnb failed to get out of the Indiana House, but it was a rare setback for the never-ending march to scale back home rule. This year legislators successfully banned local zoning rules for certain utility poles and undermined so-called “good neighbor ordinances.”

(“Good neighbor” ordinances hold tenants accountable when they repeatedly inflict crimes and nuisances on their neighbors.)

The attorney who authored the column shared a number of other examples, and made a compelling case for giving greater authority to the people elected to govern municipalities.

The lack of ability to make our own decisions, based on the needs of our own residents, isn’t just making us less competitive for Amazon-sized sweepstakes.It is preventing us from improving everything from education to infrastructure to the quality of life in our city. Legislators who mostly represent the Indiana hinterlands consistently prevent us from reaching our full potential as a thriving urban oasis in a rural state that isn’t doing so well.

Urban residents of Indianapolis suspect that’s intentional.

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Local Journalism Matters–And We’re Losing It

Ever since the 2016 Presidential election, most Americans who follow the news have been fixated on Washington, D.C., and the antics of our increasingly surreal federal government. That’s entirely understandable–but while we’ve been tuning in to the national soap-opera, we have continued to lose track of equally important matters closer to home.

Americans depend upon local news sources–newspapers, broadcast news organizations–to tell us what is happening in our communities. How is local government responding to challenges from potholes to policing? How is the local school board addressing deficits in civics education? Is the Secretary of State purging voter rolls, and if so, is that process being handled properly or with partisan intent?

The measures taken by our state legislatures and City Councils affect us more dramatically and immediately than even Trump’s disasters (assuming he doesn’t blow up the world). Recently, the Shorenstein Center held a symposium exploring the continued loss of local news and the consequences of that loss.

When Setti Warren first took office as mayor of Newton, Massachusetts in 2010, the local paper, the Newton Tab, had an editor, a publisher and two reporters dedicated to covering the mayor’s office. When he left office after his second term in 2018, the paper had lost its editor; its one remaining reporter covered multiple cities. Also during this time, the Boston Globe eliminated its regional editions, including the Globe West, which covered Newton and other parts of the MetroWest region.

The problem isn’t limited to Newton, Massachusetts.

Nationwide, many local news outlets have shuttered entirely – a March 2018 study published in the Newspaper Research Journal finds that from 2004 to 2015, the U.S. newspaper industry lost over 1,800 print outlets as a result of closures and mergers. As Warren suggested, this portends danger — studies show that areas with fewer local news outlets and declining coverage also have lower levels of civic engagement and voter turnout.

Lack of local news can occur without the complete shuttering of a local newspaper; here in Indianapolis, the Star now devotes its (dwindling) column inches primarily to sports and “the bar beat.” Coverage of city hall and the statehouse is sporadic and woefully inadequate.

As I noted in a previous blog, lack of local journalism doesn’t simply frustrate accountability; it even translates into higher costs for taxpayers. “Due diligence” by institutions that purchase municipal bonds includes investigation of the fiscal probity of the issuer. When no local journalists are covering city hall, buyers demand a higher interest rate to offset the increased risk of the unknown.

At the symposium, Mayor Warren was blunt:

I am gravely concerned about the fact that we don’t have journalists covering city hall, policy decisions, political decisions in an in-depth way, because the citizenry of my own hometown, Newton, Mass., as well as the citizens of the Commonwealth, if they don’t have the facts, they can’t make sound decisions on what directions they want their politicians to go in. So if there’s an absence of good investigative journalism, and there’s a vacuum of having data and facts and reporting, what could get filled into that vacuum is information that is not accurate. Misinformation, disinformation and opinions, not straight reporting. So we are in danger, at the local level, at the state level, and certainly at the national level if we don’t have journalists on the ground doing the interviews, double, triple checking sources. We’re not going to make sound decisions on our policy, whether it’s housing, education, transportation or the ability to protect.

In the absence of good information, a dangerous combination of social media, special interests and people who simply have an ax to grind will fill the void, making it nearly impossible to deliver genuinely responsive governance.

Without legitimate journalism–what has been called the “journalism of verification”–we can’t hold elected or appointed officials accountable.

When no one is watching the store, it’s easy to rob.

When no one is watching government, taxpayers, too, can be robbed. Even under the “best case” scenario, however, if no one is watching, it won’t function properly.

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Follow The (Lack Of) Money

When conversations turn to questions about suspicious public policies, a favorite explanation is “well, follow the money.” The implication is that people who will benefit have “purchased”(or at least influenced) the policy in question.

We very rarely follow the lack of money, although underfunding government agencies and efforts is a time-honored way that lawmakers can pretend to be addressing issues that the public cares about–issues that they (or their donors or supporters) wish would go away.

This tactic is more obvious at the federal level, but it characterizes state politics as well. Recently, I attended a small meeting of professional women–including a few lawyers–who were concerned about the inadequacies of Indiana’s Civil Rights law and the state’s underfunding of the Indiana Civil Rights Commission. The meeting was called after several attended a recent speech by a law school professor; she had enumerated the provisions of Indiana’s Civil Rights law that make it difficult or impossible to punish discriminatory behaviors–especially (but certainly not only) sexual harassment.

When I practiced law, the few discrimination cases I handled were filed with the EEOC–a federal agency. The EEOC has jurisdiction over workplaces with 15 or more employees. I was unaware that Indiana’s Commission has jurisdiction only over companies with 6 or more employees–if you are harassed or discriminated against in a workplace with 4 or 5 employees, or fewer, you are just out of luck. No remedy exists.

In cases of sexual harassment, even people who are “covered” under Indiana’s law have no incentive to bring a complaint, since our Commission can award only back pay–if the complainant was fired. No punitive or other damages, and thus no incentive for an employer to “straighten up and fly right.”

Not only that, but in order to have a case adjudicated in state court, the employer must agree to be sued. In writing. And religious employers (including religiously affiliated organizations like hospitals) are exempt. (Given the number of news stories about preachers who prey while they pray, I found this rather astonishing.)

A recent Law Review article put it bluntly:

Deviation from the administrative process is uncommon because the Indiana Code requires written consent from both parties before the civil suit commences. Nonetheless, in the unlikely event that a complainant obtains the respondent’s consent, another provision of the Indiana Code mandates that the case be tried by a judge, not a jury. Even if the employee wins the case, his damages are limited to “wages, salary, or commissions.” Furthermore, he cannot recover his attorney’s fees. Thus, the combined effect of these statutes unfairly biases state civil rights proceedings against complainants.

As appalling as I found these elements of Indiana’s law–inadequacies which evidently place us among the four least-protective states in the country–what really focused my attention on Indiana’s lack of commitment to nondiscrimination and fundamental fairness was the agency’s funding. The Commission is one of the most poorly funded state agencies, and its employees are among the most poorly compensated. If our state law were to be improved, and the Commission’s jurisdiction expanded, it simply wouldn’t have the capacity to hear the additional complaints. It can barely cope with its workload now.

What I learned at that meeting was that the persistent refusal of Indiana’s lawmakers to pass a hate crimes enhancement law is part of a larger pattern. Not only are we one of only five states without a hate crimes law, but previous efforts to add “four words and a comma” to our civil rights statute–to include sexual orientation and gender identity to the list of identities protected against discrimination–have also gone nowhere.

Our civil rights statute is among the four least protective in the country, and we significantly underfund the agency that is charged with enforcing the few protections we do offer.

Welcome to Indiana, the Mississippi of the North….

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The Boys’ Club

Residents of Indiana who follow the news have come to know the state’s current Attorney General, Republican Curtis Hill, as an arrogant and self-important grand-stander– and an African-American version of his hero, Donald Trump.

In more ways than we previously appreciated, evidently.

Hill has been popular with culture warrior Republicans who voted for him and can thus reassure themselves that their anti-immigrant, anti-Muslim, anti-social welfare positions aren’t racially motivated.

Since taking office, Hill has pursued a radically right-wing agenda; he has also spent an exorbitant amount of taxpayer dollars “upgrading” his office. Personnel turn-over since Hill assumed control of the AG’s office has been high, and has cost the state an estimated $3.6 million– suggesting a working environment that is less than collegial– and scuttlebutt is that he routinely pisses off his fellow office holders, Republican and Democrat alike.

Now, Hill is accused of groping four women–a state legislator and three staffers– at a legislative reception. According to one of them, as quoted in several media reports,

An intoxicated Hill put his hands on her back, slid them down her back, put them under her clothes and grabbed her buttocks, according to the memo. She told him to “back off” and walked away, but Hill approached her again later and again reached under her clothing and grabbed her. She again told him to “back off,” according to the memo.

I realize that this is not an unusual story in our era of #metoo. But then it gets interesting– and by “interesting,” I mean “infuriating.”

The party at which these events occurred was in March. Following the allegations, top legislators, including top Democrats, initiated an investigation. No information about the accusations or the subsequent investigation was communicated to female Democratic legislators, even those in leadership positions. The women lawmakers became aware of the allegations only when they became public, and they became public only because the Indianapolis Star obtained a leaked eight-page memo prepared by the law firm hired to investigate the allegations.

The legislative leaders–including two top male Democrats– issued a joint statement along the lines of “nothing to see here, let’s move along,” in which they agreed that an investigation had been completed and “the matter has been addressed with the Attorney General to the satisfaction of the employees involved.”

Really? From what I hear (admittedly, via the gossip grapevine) the “employees involved” are anything but satisfied. Meanwhile, the public remains in the dark about the nature of the “resolution.”

Hill, of course, indignantly denies everything, and I’m sure he’ll continue to deny engaging in inappropriate behavior, at least until other women come forward. (Let’s face it, if the #metoo movement has taught us anything, it’s that previously well-behaved men in their 50s don’t suddenly and inexplicably begin grabbing women’s buttocks.)

Tawdry and inappropriate behavior aside, here’s my question: Why did the legislative “boys club” close ranks ? I understand why Republican legislators would try to bury an embarrassing episode of gross behavior by one of their own, but why did two top Democratic legislators initially join them? Why weren’t Democratic women in leadership even informed of the allegations and investigations?

If anyone is wondering why so many women are running for political office, this sort of infuriating behavior by the “good old boys” of both parties might offer a clue.

In Washington, both male and female Republicans have demonstrated their willingness to put party above country. (And yes, Susan Brooks, we’re all looking at you.)

Here in Indianapolis, at least some male Democratic legislators are evidently willing to put gender above party. The camaraderie and mutual back-scratching of the good old boys’ club is evidently more important than a few affronted women–or even scoring political points.

After all, boys will be boys.

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