An Interview with NLC Executive Director Clarence Anthony on Race, Equity & Leadership

Clarence AnthonyNational League of Cities CEO & Executive Director Clarence Anthony, seen here speaking at NLC’s Congressional City Conference in March. (Jason Dixson)

The tragedies that have occurred in Ferguson, New York City, Baltimore, and other communities throughout America have rightly sparked conversation about the social, cultural, racial and economic factors that affect the everyday lives of city residents – particularly minorities, at-risk youth, and the poor. What can cities do to promote equality and economic opportunity for people of all races, ethnicities, ages and economic backgrounds?

When tragedies like this occur, it not only erodes the relationship between the police and the community, it highlights the fact that there is a growing economic disparity that city leaders in America must recognize and address. High unemployment rates and low graduation rates among citizens in cities, towns and villages shows that certain neighborhoods have prospered while others have not. It’s important that city leaders understand that you have to engage with, and design initiatives for, all constituents in every neighborhood.

For example, city leaders must focus on creating vibrant downtowns while developing inclusive and affordable housing in neighborhoods. This type of approach to public policy will create more engaging cities where citizens can live, work and raise their families within the community that they call home. One way we can accomplish this is to create incentives so that the private sector will hire from within the community. When city leaders promote this type of growth, cities benefit and residents become vested in their community.

Cities should also examine the appointment process for city advisory boards and councils. For example, a planning and zoning commission that doesn’t reflect the ethnic, racial or gender diversity of the city is not truly representative of that city. From parks and recreation departments and advisory councils to tourist development councils and workforce boards, every policy board that advises the elected leadership should represent the diversity of that city. It can be done, but you’ve got to be very strategic and intentional, and have a real commitment to making sure that every segment of the population is represented.

These are just a few of the concrete steps that cities can take to ensure that their communities are equally represented in government. If a community is under-represented, and its needs are not served, then its residents will not be vested in the city as a whole. They won’t feel like the city is their home. And then you’ll see the tragic events that have happened in countless cities across the nation continue to occur. All of these cities have people who feel that they are not part of a community; that they are not “real” citizens with a voice in government. And they will find other ways to make their voices heard.

So there can’t be a disconnect between municipal authority and the people it represents.

You have to have that connection. You have to include them in the governance process, in the community process. I was just at a conference in Philly – Cities United – and it had a panel of young African American men, and their message was “Don’t talk at us; talk to us, and with us.” Many of them were in their mid-twenties, and public policy and programs are being designed for them – but without their input. That has to change. You have to include them in the development of the community in which they live.

The root causes of the recent tragedies are complex and nuanced. Two distinct events consistently stand out, however: the death of a young black male as a result of an interaction with police, and the violent public response that subsequently occurred. What steps can city leaders and local elected officials take to address the potential for these tragedies to occur in their cities?

There has to be an acknowledgement that there are still challenges in communities throughout America when it comes to race relations – specifically, race relations with police departments. Something must occur to strengthen trust between the minority community and police in cities throughout America. At this point, unfortunately, we are starting to see police being targeted in reprisal; community trust continues to erode. We must start a conversation of understanding and partnership – and that conversation must be led by city leaders. The elected officials who are members of the National League of Cities are exactly that type of group; they’re city leaders who strive to create a bridge between police and communities, so that real conversations can occur.

In addition, I think city leaders should start to re-examine – and implement, wherever possible – community policing policies that provide for a real understanding of the communities they serve; there must be understanding to have a relationship with the community. Once you have that relationship, you’ll be able to engage. So city leaders must be able to look at how they’re investing their resources and what kind of progress is being made throughout the community as a whole. When city leaders acknowledge that they have diversity in the community, and they create opportunities to bring people throughout the community together, that creates relationships and real conversations.

This is happening in some communities, but we need it to happen everywhere. The questions involving black males in America focus on more than just police relations – they take into consideration the high unemployment rate, the low high school graduation rate, and the level of poverty that exists in cities throughout America, among other factors. The takeaway is this: city leaders have to focus on improving engagement and relations in their communities. We have to look at how we provide creative and innovative techniques to reach the African American community so that we can achieve our goal of making true connections that are lasting and productive. It will take hard work and partnerships with our educational system and the private sector – and on the law enforcement side, those same partnerships need to develop, focusing on education and training on how to value diversity and how to communicate across cultures.

The change we need will not occur overnight; it will take patience and time to build the trust that our cities deserve. We need to spur conversation, in an effort to reach a certain level of trust and understanding between police and communities. The National League of Cities is quickly becoming a nexus of conversation about race, equity and leadership in American cities. That conversation is long overdue.

Do you see the Cities United event in Philadelphia as one of the forums for that conversation?

Yes. I think Cities United is not only a forum for that conversation, but an excellent tool to help elected officials get the technical expertise they need to deal with the larger issues involved. For example, Cities United provides consultants that help city leaders respond to the challenges faced by American cities that we’ve discussed today.

How does the National League of Cities’ lead that conversation?

Our REAL initiative is a very important tool and resource for city leaders. It’s designed to help them address racial tensions in their communities and create meaningful conversations around racial diversity and equity issues. REAL stands for Race, Equity And Leadership – and the piece that we really have to elevate is the piece on leadership, because our members are the ones who are responsible for governance in American cities.

Earlier, you posed the question, “What should city leaders do if something like this happens?” The challenges we’ve spoken about today are especially difficult challenges for any city leader to face, and it’s the responsibility of the National League of Cities to develop best practices around these issues, give city leaders the space to discuss the challenges they face with a network of peers, and then provide them with the tools they need to manage the situation if something like what happened in Baltimore or Ferguson occurs in their community.

I wish I could sit here and tell you that this will be the last time that tragedies like these will occur. But the reality is that, until a systematic strategy is in place to bring about full economic participation as well as improved relations between police and the communities they serve, these tragedies could happen in any city in America. City leaders are standing up and saying, “we need to fix these issues before something like this occurs in our community.” That’s a conversation that needs to be had. We’re going to start seeing city leaders begin to deal with the injustices, the inequality, and the creation of opportunities for all of their citizens.

And that’s what we have to do: we have to build a city in which everyone is a participant, where all citizens feel like they can raise their kids, and live and work and play in a safe and vibrant environment. You don’t call a place home when you don’t have a system of governance that supports you. Right now, I think that’s one of the biggest challenges American cities face. But if we can rise to that challenge, I think we’ll have more people out on the streets saying “Hey, this is our neighborhood; we own this.” We have to create cities that all citizens can call home.

Paul Konz headshotAbout the Author: Paul Konz is the Senior Associate Editor at the National League of Cities.

City Investments in Financial Capability are Paying Off

This post was co-written by Alysha Davis.

President Obama issued a proclamation declaring April 2015 to be National Financial Capability Month. It’s described as a to time to “renew our efforts to support the informed financial decisions that will open doors into the middle class and help ensure economic security for all.”

Financial capability 2A couple receives financial counseling and foreclosure prevention assistance in Los Angeles. (David McNew/Getty Images)

In his proclamation, the president calls upon “all Americans to observe this month with programs and activities to improve their understanding of financial principles and practices.”

As April comes to a close, we wanted to highlight some of the innovative ways that cities are stepping up and delivering financial capability opportunities to their residents at the local level. The National League of Cities Institute for Youth, Education and Families (YEF Institute) is supporting these efforts in a number of ways.

Mayors and city council members recognize the importance of helping residents become more financially secure and gain access to financial services, not just to enhance the economic stability of families but also to boost local economic development. More and more cities, often in partnership with community-based organizations and financial institutions, are offering financial education and counseling, homeownership assistance, expanded access to safe and affordable financial services and debt reduction strategies, to call out just a few of the activities taking place at the local level.

To learn more about these and other financial inclusion programs, stay tuned for a forthcoming report from the YEF Institute on how municipal leaders from across the country are stepping up to address the financial struggles of their residents. The report will document the findings of NLC’s City Scan of Local Financial Inclusion Efforts, which included a survey of 118 city leaders, follow-up telephone interviews and a roundtable with city officials and community partners focused on municipal financial inclusion efforts.

The NLC YEF Institute has a history of assisting city leaders to implement programs to build residents’ economic stability. Over the last two years, we have been working with five cities (Savannah, Ga.; Newark, N.J.; Louisville, Ky.; St. Petersburg, Fla. and Houston) to implement the Local Interventions for Financial Empowerment Through Utility Payments (LIFT-UP) program, an innovative pilot project to help low-income families pay their utility bills and achieve financial stability.

As part of LIFT-UP, we are providing technical assistance to help cities connect families who are in debt to city-owned utilities and with options such as a restructured payment plan, payment incentives and a variety of financial empowerment services, including financial counseling.

We also recently launched a project to identify best practices for local leaders to incorporate financial capability strategies into municipal youth employment programs. The aim is to improve the ability of young people (ages 14 – 24) to effectively manage their finances – from saving to building credit and keeping debt manageable. We are looking at the roles that city leaders, banks, credit unions and other partners can and do play in ensuring that young jobseekers have access to financial knowledge and services.

As part of this project, we will be providing guidance to the Consumer Financial Protection Bureau and the U.S. Department of Labor on their new technical assistance opportunity to help cities include financial capability in their youth employment programs.

About the Authors:
Heidi-HeadshotHeidi Goldberg is the Director for Economic Opportunity and Financial Empowerment in the NLC Institute for Youth, Education, and Families. Follow Heidi on Twitter at @GoldbergHeidi.

Alysha Davis
Alysha Davis is the Associate for Research and Communications in the NLC Institute for Youth, Education, and Families.

The Arts Mean Business

This is a guest post by Jay H. Dick, Senior Director of State and Local Government Affairs at Americans for the Arts.

Meyerson_Symphony_Center_Dallas_1_fullsizeThe Morton H. Meyerson Symphony Center in Dallas, Texas, is a visually spectacular example of the type of anchor for economic development that can be achieved when city governments invest in arts and culture initiatives. (photo: Matt Clarkson)

If your city had a new construction company move to town, this would be good news – more jobs, more economic activity, and more tax revenues to be collected. How about if your city received funding from your state to widen a road? Again, you would probably welcome this news with open arms. Now, think about a new arts organization moving to town. Would you look at this group with the same economic lens that you used to look at the construction or transportation business?

If your answer was no, here’s why you should!

The U.S. Bureau of Economic Analysis (BEA) with the National Endowment for the Arts recently released their second annual report measuring the arts and culture sector’s contributions to U.S. gross domestic product (GDP). This year’s report found that the arts and culture sector represented 4.32 percent of the GDP – a higher percentage than tourism (2.6 percent), transportation (2.7 percent) and construction (3.4 percent) – at $698.7 billion!

(Americans for the Arts)

In other words, the arts and culture sector have a larger impact on your economy (in terms of GDP) than these other industries. The unfortunate problem is that we don’t readily recognize the economic value and impact of the arts. Luckily, more research is being done on this topic by groups such as the BEA and by organizations like mine, Americans for the Arts.

For example, did you know that, according to our Arts and Economic Prosperity IV study, the nonprofit arts are a $135 billion industry that supports over 4 million full-time equivalent jobs? Further, the nonprofit arts contribute $22 billion dollars in tax revenue, of which $6.07 billion is collected at the local level. Given that most local governments (that Americans for the Arts has studied) appropriate less than they receive in tax revenue, the arts are a wonderful investment!

Our Creative Industries: Business & Employment in the Arts reports provide a research-based approach to understanding the scope and economic importance of the arts in America. Nationally, 702,771 businesses are involved in the creation or distribution of the arts, and they directly employ 2.9 million people. This represents 3.9 percent of all U.S. businesses and 1.9 percent of all U.S. employees – demonstrating statistically that the arts are a formidable business presence and are broadly distributed across our communities. Arts businesses and the creative people they employ stimulate innovation, strengthen America’s competitiveness in the global marketplace, and play an important role in building and sustaining economic vibrancy. In addition to our national numbers, there are downloadable maps on our website of every state, federal legislative district, state legislative district, counties and some larger cities.

Cities of all sizes that, even minimally, invest in their local arts organizations can see economic benefits. For example, over 300 cities have created cultural districts to foster the economic viability of their downtown. Cultural districts are a well-recognized, labeled, mixed-use area of a city in which a high concentration of cultural facilities serves as the anchor of attraction and robust economic activity.

The Playhouse Square Center in downtown Cleveland, Ohio. (Getty Images)

According to a study by the Federal Reserve Bank of Cleveland, Ohio, the Cleveland Playhouse Square’s downtown economic impact has been impressive. For every one dollar spent in ticket sales, $2.20 is generated in additional expenditures to the local economy. In a five-year period, 79 new businesses moved downtown, and the cost of downtown office space nearly doubled.

In the late 1990s, Paducah, Ky. had a problem – an area of the city, LowerTown, was run down. Fifty percent of homes were dilapidated; 73 percent of homes were renter-occupied; and there was a 17 percent unemployment rate with 51 percent of people living in poverty. To tackle the problem, city leaders came up with a unique plan: the Artist Relocation Program. City leaders partnered with banks and other businesses and reached out nationally to artists to invite them to move to Paducah. The program would offer them a very low-interest loan if they bought a house, agreed to make improvements, worked as an artist out of their house, and lived there for at least five years.

Dixie Leather Works, located in the LowerTown arts disctrict of Paducah, Ky. (photo: Paducah Visitors Bureau)

Dixie Leather Works, located in the LowerTown Arts District of Paducah, Ky. (photo: Paducah Visitors Bureau)

Ten years later, dilapidated homes have fallen to 3 percent; the renter-occupied rate is down to 15 percent; unemployment is down to 6 percent; and the number of people living in poverty has been reduced to 4 percent. This is all a direct result of the Artist Relocation Program.

These are just a few examples of how the arts and culture can help your city’s economy. The great thing about the arts is they are already in your city. The arts, unlike many industries, are not going to relocate overseas or to a different city. The arts are committed to serving your city’s residents and improving the quality of life. But what they do need are community leaders to recognize them as an industry worthy of both private and public sector support. So, please contact your local arts groups. Get to know them, understand their programming, and how they work to improve your city. And if you have any questions, feel free to contact me directly – I would love to help.

Jay H. DickAbout the Author: Jay H. Dick is the Senior Director of State and Local Government Affairs at Americans for the Arts, an organization which serves, advances and leads diverse networks of organizations and individuals who cultivate, promote, sustain and support the arts in America. Americans for the Arts has partnered with NLC for almost 20 years on a variety of programs.

Workforce Development, Jobs Report, and Broadband: This Month in Economic Development

Our monthly roundup of the latest news in economic development filtered through a city-focused lens. This month’s roundup features stories from NLC’s Congressional Cities Conference. Reading something interesting? Share it with @robbins617.

"Photo by Jason Dixson Photography. www.jasondixson.com"President Obama announces his new TechHire initiative, which calls for a partnership between cities, higher education and the private sector to expand access to tech jobs in communities across the country, at NLC’s Congressional City Conference in Washington, D.C. last week. (Jason Dixson Photography)

White House announces TechHire initiative to expand skills training for tech jobs. President Obama addressed NLC’s membership at the Congressional Cities Conference and asked for cities to partner with him on TechHire, a new workforce program designed to train low-skilled workers for well-paying information technology jobs like software development, network administration and cybersecurity. The new initiative will include $100 million in competitive grant funding as well as private sector resources and support for 21 communities selected to participate.

Skills gap: myth or reality? Meanwhile, the ongoing debate continues over whether or not a skills gap actually exists in our country’s workforce. Tom Snyder, President of Ivy Tech Community College, wrote a piece for The Huffington Post about leveraging community colleges for skills training on emerging technologies. New York Times columnist Paul Krugman recently challenged the idea of a skills gap, arguing there’s insufficient evidence to prove a skills gap is holding back employment. However at the local level, where job opportunities are returning but going unfilled, mayors are responding by developing workforce programs to meet the specific hiring needs of area businesses (like in Missoula, Mont., and Heath, Ohio).

The latest employment trends in local government. NLC’s latest Local Jobs Report analysis by Christiana McFarland found slight gains in overall public sector employment, with local government responsible for the majority of those new jobs last month. But this positive news is tempered by the fact that the local government workforce is still smaller today than it was at its peak in 2008. Another local government trend highlighted by the Emerging Local Government Leaders (ELGL) network is the lack of growth in the percentage of chief administrative officers that are women. That number still stands at 13 percent – the same today as it was back in 1984. The thought-provoking ELGL “13 Percent” blog series features personal stories from city employees.

Municipal broadband could be coming to a neighborhood near you. In case you missed it, the Federal Communications Commission (FCC) voted to allow the municipal broadband systems in Chattanooga, Tenn., and Wilson, N.C., to expand outside their existing borders. This is encouraging news for other cities that are considering building their own broadband systems, like Seattle. The decision also affirms NLC’s position that municipal broadband systems can play an important role in supporting local growth and opportunity. More info from the FCC can be found here.

Cities are making the sharing economy work. NLC released a new report, Cities, the Sharing Economy, and What’s Next, at the Congressional Cities Conference. The report provides analysis from interviews with city officials about the impact of the sharing economy (and companies like Uber, Lyft, and Airbnb) on innovation and economic development and how cities are managing safety and implementation considerations. NLC’s Brooks Rainwater explained how this new resource will assist city leaders as they understand, encourage, and regulate the sharing economy in their cities.

For a laugh. Not to start a dog-versus-cat war, but how great would it be if every economic development strategy included plans for a cat café? Meanwhile in Boston, a GoFundMe campaign aiming to raise $300 million to fix the struggling local transit system first started out as a joke but is now receiving national media attention. The campaign is unlikely to reach its goal, but if you donate $50, the fund’s creator will scream your name on the orange line for 45 minutes during rush hour.

Idea of the month: Life experience as college credit. Getting a degree later in life is hard, but Pennsylvania’s community colleges are making it easier by now counting life experience as college credit.

What we’re reading. There were a few solid reports this month on workforce, wages, and jobs. Brookings released a report identifying the advanced industries with the greatest prospects for long-term economic growth (Governing provided a solid overview of the key findings). The Boston Consulting Group found that the top three reasons companies bring manufacturing jobs back to the U.S. are better access to skilled workers, lower shipping costs, and shorter supply chains. Finally, the Economic Policy Institute testified before Congress about government actions needed to create jobs and grow wages. The testimony said that local governments should implement targeted employment programs and also invest in broadband, education, transportation and other infrastructure projects.

(Last month’s roundup is here.)

Robbins_small (2)

About the author: Emily Robbins is the Senior Associate, Finance and Economic Development at NLC. Follow Emily on Twitter: @robbins617.

Expanding on the President’s TechHire Initiative: How Innovation Districts Catalyze Jobs, Creativity & Growth

"Photo by Jason Dixson Photography. www.jasondixson.com"President Barack Obama, seen here speaking at NLC’s Congressional City Conference on Monday, March 9, revealed his new TechHire initiative to expand access to tech jobs in communities across the country. NLC has just released a new research brief on Innovation Districts that explores the President’s ideas in more depth, specifically reinforcing the important intersection where business, education, technology, and city leadership meet.

With President Obama’s announcement at the NLC Congressional Cities Conference of the new TechHire initiative, the White House will make available $100 million in grants to expand the number of Americans in well-paying tech jobs. The program will include city leaders, universities, community colleges, and the private sector with a special focus on underserved population, working together to expand tech jobs. At the same time as TechHire ramps up in the initial 21 cities, it is increasingly apparent that place in the 21st century economy matters more than ever. City leaders know that the tech sector of today is increasingly gravitating away from suburban office parks towards central cities and innovation districts.

Cities incubate creativity and serve as labs for innovative ideas and policies, and the place where this is happening more and more is in Innovation Districts. These districts are creative, energy-laden ecosystems that focus on building partnerships across sectors. Innovation Districts attract entrepreneurs, established companies, and leaders from all walks of life, providing them with the space and the place they need to create unexpected relationships and find transformative solutions.

From established environments, like the Boston Innovation District to the newly developing innovation district in Chattanooga, one of the founding TechHire cities, there is an increasing focus on catalyzing economic growth through “spatial clustering.” These districts share similarities with traditional economic clusters, but differ in key ways. Placemaking is central to innovation districts, and there is a focus on being sited in high-density areas with a cross-section of employees that want to share ideas instead of being cloistered apart from one another. These urban ecosystems foster collaboration and bump and spark interactions between workers that might just create the next big idea.

NLC’s Center for City Solutions and Applied Research (CSAR) has just released a new research brief on Innovation Districts that explores this concept in more depth, specifically reinforcing the important intersection where business, education, technology, and city leadership meet. Further work will be forthcoming in this space, including an in-depth look at the innovation district forming in Chattanooga, as well as work in partnership with other key players. Innovation districts can encourage experimentation and serve as a key strategy for cities as they further urban economic development and pave the way for new job opportunities through initiatives like TechHire.

Brooks Rainwater bio photoAbout the author: Brooks Rainwater is the Director of the Center for City Solutions and Applied Research at the National League of Cities. Follow Brooks on Twitter at @BrooksRainwater.

Opportunity for Cities to Help Young People Achieve Financial Success

NLC is providing guidance to the Consumer Financial Protection Bureau and the U.S. Department of Labor on their new technical assistance opportunity to help cities include financial capability in their youth employment programs.

American Apparel Holds Open Call For Jobs In New York City Young jobseekers attend an open jobs call. (Spencer Platt/Getty Images)

Each year, millions of youth in cities across the country participate in programs designed to help them secure employment. Many of these young people hail from low-income or distressed communities and do not have access to the same kind of educational and career opportunities as their more affluent peers.

Often, a lack of attachment to the labor force can lead to risk of gang activity or criminal involvement. Youth employment programs, many of which are led by municipalities, have the potential to provide crucial pathways to economic opportunity and increased social mobility for participating young jobseekers.

Being in the labor force at a young age has benefits for young people, their families and their communities. It often contributes much-needed income to families that are struggling to get by. It also encourages civic engagement and provides valuable job skills and work experience that can lead to long-term, stable employment. Moreover, when young people are employed, cities benefit from reduced crime and overall economic development.

Having a job also allows young people to be more financially independent. However, millions of young people enter the workforce without basic money management skills or knowledge about today’s complex financial systems, and these skills are not typically taught on the job. And because financial knowledge is not a core component of our education system, many young people lack the necessary awareness and skills to become financially responsible adults.

To improve the ability of young people to effectively manage their finances – from spending and saving to building credit and keeping debt manageable – NLC is working with two federal agencies to help city leaders identify ways to incorporate financial capability into youth employment programs.

As part of a broader project on financial capability and youth employment, NLC is providing guidance to the Consumer Financial Protection Bureau (CFPB) and the U.S. Department of Labor on their just-announced technical assistance opportunity for up to 25 cities. Assistance will focus on ways cities can ensure that financial capability training and access to safe and affordable financial products are available for young jobseekers and workers.

For more information on how your city can receive this technical assistance, check out CFPB’s blog post and read the criteria for submission. Letters of interest are due to the CFPB by Thursday, April 30, 2015.

Heidi-Headshot
About the Author
: Heidi Goldberg is the Program Director for Early Childhood & Family Economic Success in NLC’s Institute for Youth, Education, and Families. Follow Heidi on Twitter at @GoldbergHeidi.

Local Government Employment Buoys Stagnant Public Sector

Today’s BLS February jobs report shows a slight improvement in public sector employment, with local government employment responsible for the majority of the gains.

Total public sector employment is up 7,000 jobs in February; local governments added 4,000 jobs, and state governments added 3,000. There were no gains in Federal government employment. Within local government employment, local governments (excluding education) added 2,600 jobs, and local schools added 1,200.

Despite these improvements, local government employment remains 512,000 jobs below its July 2008 post-recession peak.

March jobs report graphic

View the January Local Government Jobs Report.

christy-mcfarlandAbout the Author: Christiana K. McFarland is NLC’s Research Director. Follow Christy on Twitter at @ckmcfarland.

Have City Finances Recovered?

At the release event for NLC’s annual City Fiscal Conditions, it was revealed that although the worst is behind, city finances have not yet reached full recovery.

CFC-Panel-Blog

Most accounts of the current state of economic and fiscal health go something like this: stabilizing but not yet returned to pre-recession levels. The media guys (and gals) hate it. There doesn’t seem to be much of a story when all we are seeing is incremental change. But when you think about persistently stagnant growth, the real question becomes, how far are we from full recovery?

At a release event today for NLC’s annual City Fiscal Conditions, it was revealed that although the worst is behind, city finances have not yet reached full recovery.

The cost and demands of services, pension, healthcare and infrastructure are on the rise. Federal aid and accompanying mandates are in flux and create uncertainty for local governments. Revenue options are constrained by economic conditions, state limitations and political culture.

Compounding these fiscal stresses are new demographic trends, housing and labor market changes, and the rise of new and disruptive industries, all of which underscore the misalignment between traditional revenue sources — property, income and sales taxes –and the economic activity that drives them.

So, how do we know how far city budgets are from full recovery? What are the key vital signs of city fiscal health?

The outlook of city finance officers, general fund revenues, workforce and personnel, and ending balances offer a unique window into recovery at the local level.

Outlook of City Finance Officers

Better Able Less Able-02

In 2014, 80% of city finance officers report that they are better able to meet the financial needs of their community this year than last. In fact, more city finance officers report a positive outlook this year than in the 29-year history of the survey.

On the flip side, this finding also means that 80% of cities across the country were worse off last year, indicative of magnitude of the recession and the depths to which cities sank throughout the recessionary period.

General Fund Revenues

General fund revenues grew modestly in 2013, and were the first post-recession year over year growth in revenues. However, revenues are projected to stagnate as cities close the books on 2014.

Chart 2 2006 base year-02

To gain more perspective on how the general fund revenues are faring pre and post-recession, we created an index using 2006 as the base year. 2006 was the pre-recession peak in revenues, the low came in 2012 when revenues were 88% of 2006 levels.

The first post-recession increase in revenues didn’t come until 2013 but in 2014 are still only projected to be around 90% of the 2006 revenue base.

Revenues are not yet at full recovery and the growth in revenues appears to be stagnating.

Tax graph-03

Another window in general fund revenues is to take a closer look at the drivers of the general fund: property, sales and income taxes.

During the recent recession, all three sources of tax revenue declined together due to the severity and length of the recession. Property tax revenue is anticipated to increase slightly in 2014 as collections catch up with improvements in the real estate market. This will be the first increase coming out of the recession.

Sales tax and income tax revenues continue to grow in 2013, but are projected to slow as cities close the books on fiscal year 2014. This is indicative not only of a harsh winter, but also the type of employment recovery we are seeing, with low wage jobs dominating growth.

Municipal Workforce

Speaking of jobs, throughout the recession, many cities implemented some combination of personnel and workforce-related cuts, including hiring freezes and layoffs, in an effort to reduce costs.

muni workforce-07 (2)

The good news: for the first time post-recession, more cities are increasing rather than decreasing the size their municipal workforces. The bad news: in the context of returning to full recovery, there are still ½ million fewer local government jobs today than there were in 2008.

This is particularly troublesome given the state of the mid-wage and mid-skill jobs crisis we are experiencing today.

Ending Balances

Ending Balances, or reserves, provide a financial cushion for cities to help balance budgets or to use toward a major planned project. Bond underwriters also look at a city’s reserves as an indicator of how likely the city is to make good on its debt.

Ending balance chart-02

Ending balances are on a positive trajectory, at almost 22% of expenditures in 2013. Prior to the recession, ending balances hovered around a high of 25% of expenditures, indicating that reserves have not yet hit pre-recession levels.

So, as we take stock key city fiscal vitals, we are starting to see city finances turn the corner coming out of the recession, but as revenues, workforce, and ending balances indicate, they have not yet returned to full recovery.

For first time since the recession, general fund revenues are increasing, but are projected to stagnate in 2014. More cities are hiring, helping to close the mid-wage, mid-skill gap, but we are still ½ million jobs away from pre-recession levels. Ending balances are showing a positive trajectory, but again, still have not caught up.

Cities were at the forefront of the Great Recession and are making their way back through tough choices, innovation and partnerships with the private sector, nonprofits, and others. Given persistent constraints on city budgets, however, the future is anything but certain.

christy-mcfarlandAbout the Author: Christiana K. McFarland is NLC’s Research Director. Follow Christy on Twitter at @ckmcfarland.

More than money: Alternative incentives that benefit companies and communities

Construction in Raleigh, N.C.

Post adapted from Smart Incentives

Specialized services can complement financial incentives, while taking the concept of a partnership between business and community to a new level. Guest blogger Swati Ghosh, the International Economic Development Council‘s Director of Research and Technical Assistance, reports below on an interesting new paper addressing these and other alternative incentives.

Of all the tools that economic developers use to attract businesses to their community, incentives are the most controversial. Typically financial in nature, incentives are direct subsidies to businesses in the form of tax breaks, loans or grants. Proponents maintain that such subsidies are necessary to grow jobs locally as they reduce the cost, or risk, of doing business in a community. Critics, on the other hand, argue that there is no direct link between economic activity and such business subsidies, and some even suggest that they are a drag on economic growth.

Economic developers should closely follow an emerging alternative – programs and services that assist businesses but are not direct financial subsidies. Termed alternative incentives, these are investments in community programs that strengthen the business climate or that help a particular business in a way that benefits the broader community. They are a win-win: For businesses, alternative incentives can reduce the cost or risk of doing business in a community, yet communities retain these investments even if a firm shuts down or relocates to a different community.

IEDC’s Economic Development Research Partners program has developed a new paper focusing on alternative incentives. It is not an argument against the use of financial incentives; rather, it advocates for increased use of alternative incentives either alone or in conjunction with financial incentives. The paper, “More than Money: Alternative Incentives that Benefit Companies and Communities” (PDF), examines five categories of alternative incentives:

  • Talent/Workforce development
  • Real estate and permitting
  • Research and data
  • Networking and promotion
  • Infrastructure improvements

The paper is based on a survey of the IEDC membership to understand usage of over 40 different types of alternative incentives. It also includes several examples of organizations that have successfully utilized alternative incentives for business attraction and expansion, alone or in conjunction with other financial incentives. The paper concludes with recommendations for ways that economic developers can use alternative incentives effectively:

  • Focus on building relationships
  • Examine your organization’s strengths and utilize them creatively
  • Offer a wide spectrum of services
  • Bring along the key stakeholders
  • Focus on the needs of the community

As scrutiny, clawback provisions and other restrictions on the use of financial incentives increase, it may be beneficial to examine other options to support businesses. Alternative incentives not only stay in the community, but bring less of a burden in terms of monitoring and legal costs – benefits that every community and EDO can agree on.

90 Years of Helping City Leaders Improve the Local Business Climate

Seattle, Washington“How does a city government work with local industries, businesses, and institutions to keep them in the city and improve communications with them?” This crucial question was raised by Mayor Sam Schwartzkopf of Lincoln, Nebraska, in a 1968 article in NLC’s previously published Nation’s Cities magazine titled “You Have to Work to Keep Industry.” In today’s economic climate, the issue of business retention and expansion remains a prominent issue for city leaders and economic developers.

While many mayors and city councils across the country recognize the value of attracting new industries and businesses, there is also a growing emphasis on fostering local talent and supporting entrepreneurs and small businesses.

Mayor Schwartzkopf suggested back in 1968 that NLC members should consider adopting a city program he launched in Nebraska to personally visit local shops and companies and ask how the city can be of service to them. The Mayor and his team aimed to meet with as many of the city’s 300 firms as possible.

“Although the attraction of new firms and industries to any community is always extremely important, I feel that city government today must show its present industries that city government is deeply interested in them and that city government wants them to be interested in their city,” Schwartzkopf wrote in his article. “I strongly feel that city government must know what its industrial, business, and institutional leaders are thinking; what they would like to see done within the city.”

Some of the business assistance that Mayor Schwartzkopf provided as a result of his visits included providing increased police presence to an outlying industrial neighborhood, removing street parking to help reduce traffic congestion, modernizing street lighting, and dispatching city engineers to inspect the quality of a storm sewer near a steel company.

This type of support for the local business community is very similar to what we see today from cities involved in NLC’s Big Ideas for Small Business network. Our recent report on small business development highlights two key strategies for developing a business-friendly climate – proactively engaging the local business community and creating advisory councils with representation from small business.

As we highlight in the report, the city of Seattle’s Business Retention and Expansion Program (BREP) strives to retain and grow early-stage business through proactive outreach initiatives. The city staff who lead BREP aim to provide 250 businesses with direct assistance every year. The Seattle program has already helped hundreds of businesses find funding opportunities, select new site locations, and navigate government regulations.

In Cincinnati, the city formed a Small Business Advisory Committee (SBAC) as a mechanism for the local small business community to advise city officials on policies and programs. The SBAC voices the concerns of business owners and works in collaboration with city officials to find solutions to common problems. One of the city’s accomplishments since the establishment of the SBAC has been to streamline the permitting process by creating “jump teams” of city employees that work in coordination to assist small businesses.

While the economic landscape has evolved in many ways since 1968, Mayor Schwartzkopf from Lincoln knew back then what remains important today: getting the business friendly basics right is critical to supporting and growing local businesses. NLC is grateful to still be providing research, education and best practices about how cities can do just this.