City Fiscal Structures and Land Development, a 2003 Brookings Institute paper by Michael A. Pagano, discusses the impacts of various income sources on city growth policies. Property tax, sales tax, income tax, service fees or combinations of dependency result in a growth focus on consumption, job creation or land values. Each focus has an impact on physical and fiscal outcomes for cities. Connecting income strategies and land development is an important revelation for communities that are struggling with growing infrastructure disrepair, expanding budgets and inadequate resources to address needs. Aligning income strategies and growth strategies can provide a better means of decision making, policy setting and priority setting. It also sets the stage for understanding who should receive incentives. For example: Enhancements that build higher value property taxes in the city are better than promoting suburban development that require larger investments in roads, schools and other public services. “That is to say, a corporate executive who works in the city and lives in the suburbs is less desirable than one who owns property in the city because the city’s direct fiscal impact is linked to heightened property values.” The paper looks at examples in Columbia, S.C., Oklahoma City, and Columbus Ohio.


Bruce Katz, Smart Growth Saves Money, presents additional support for the Pagano paper in an April 2003 article. He cites studies from several states that show that planned development saves the public money when compared to current low-density sprawl. One study by Robert Burchell for the Real Estate Research Corporation projected that compact growth could be 70% cheaper than scattered development. The issue - not having enough money to support current patterns of growth - is aligning non-traditional partners such as fiscal conservatives and environmentalists.

Competitive communities craft unique, balanced strategies of brainpower, innovation and quality place. These 3 basic elements do not stand as separate tactics. Focusing on brainpower development and young knowledge worker recruitment will be more successful when combined with an amenity improvement strategy to provide the quality lifestyle that appeals to this highly sought after group. These two elements are more successful when innovation strategies include the experience of older workers in building successful businesses. The “competitive community model” is reinforced in a recent study from the Brookings Center on Urban and Metropolitan Policy, Labor Supply Pressures and the “Brain Drain”: Signs from Census 2000. This insightful work looks at the migration patterns of knowledge workers, dispels some of the myths of the “brain drain” rhetoric, and recommends focusing on developing human capital as a long term economic development strategy:

“Ultimately, state and local economic development policy makers should consider shifting their emphasis from increasing the quantity of certain types of workers, toward embracing human capital development as a longer-term goal. Paired with amenity strategies for younger workers and more workplace flexibility for older workers, policies to raise the stock of knowledge in a region can “split the difference” between demand-side and supply-side labor market interventions.”

This work is part of a multi year Living Cities Census Series. Learn more by visiting the Living Cities web site.