Facing immense fiscal and political pressures, many local governments are looking for ways to fund services without raising taxes. But officials need not curb their enthusiasm for fiscal responsibility if they simply put the brakes on being in the parking business. Pennsylvania has 41 special government parking authorities; the rest of t
Earlier this month, Gov. Tom Corbett suggested the commonwealth consider leasing state park operations and services. Almost immediately and without thoughtful consideration, pundits launched political fire, claiming "privateers" would exploit or commercialize our natural resources beyond recognition.
This report surveys the scope of Yellow Pages Government in Pennsylvania, looks at examples of state and local privatization throughout the country, and outlines best practices to equip lawmakers to successfully transition government out of unnecessary services by implementing a variety of models.
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Pennsylvania is close to adopting Missouri's 40 year old failed land banking policy. House Bill 1682, which has already passed the House and the Senate's Urban Affairs and Housing committee, would enable local governments to establish public entities that could acquire land, incur debt, and develop vacant properties. However, these entities often block development.
Missouri' Show-Me Institute discovered St. Louis' land bank refused almost half of all purchase offers from 2003 to 2010. It even rejected a charter school company offering $300,000 for 13 abandoned parcels back in 2005. As of April 2011, all 13 of the parcels remain vacant. Check out the video below to learn more about St. Louis' experience.
Philadelphia, already anticipating the passage of HB 1682, introduced ordinances to create a land bank that would give the district Council member authority over development. The Show-Me Institute also had a stern warning about this practice in yesterday's Philadelphia Inquirer:
One rundown St. Louis building had offers from four different buyers, all rejected by the land bank. But when the area alderman showed up at a land bank meeting and asked that it be sold to another buyer, it was.
Unfortunately, the same policy has been written into Philadelphia's land bank bill. In its current form, it would forbid the bank from entering into a transaction without the approval of the district Council member. This will almost certainly thwart development.
If you missed it, ReasonTV put out a great video on the city of Harrisburg's fiscal disaster, asking whether Harrisburg's nightmare is America's Future.
Much of what happened in Harrisburg—from owning a baseball team to spending millions on artifacts for a Wild West museum that never happened to the boondoggle of an incinerator—are unique to the capital city. But other cities, like Scranton and Johnstown, may not be far behind.
One trend most commonwealth cities face is declining population. Responding to high taxes, failing schools, growing debt and pension costs, "yellow pages" government and high crime, residents are fleeing cities.
With the exception of Allentown, Pennsylvania's major cities have all lost population from their peak. Harrisburg, Pittsburgh, Altoona, Scranton, and Wilkes-Barre have all lost more than 40 percent of their population. Johnstown has only one-third its population from 1920!
|% Change from Peak||2010 Population||Peak Year||Peak Population||2000 Population||1990 Population|
The city of Harrisburg is facing a fiscal crisis primarily brought on by over-spending, accruing too much debt, and getting into areas government has no business—from the incinerator to owning a baseball team to collecting wild west artifacts.
But the Capitol City's woes are aided by the abundance of tax exempt properties. Nearly half of all property value in the city of Harrisburg is owned by government or hospitals and other charities exempt from property taxes. Yet these properties still receive city services, including fire and police protection, and benefit from other core city responsibilities, like road repair and clearing the streets of snow (more or less, as anyone who has driven in Harrisburg after a snowstorm can attest).
According to information from the Mayor's Office and the Dauphin County Assessor detailing Harrisburg tax-exempt government properties, assessing the municipal property tax rate on land (not on improvements, or imposing the school property taxes) would generate around $6 million per year, not an insignificant sum.
The city receives payment in lieu of taxes (PILOTs) to offset some of these costs. According to the Act 47 report, the city gets about $410,000 in PILOTs from 13 organizations. The state budget also includes $500,000 (down significantly from years past) for Capital Fire Protection. But these payments are a far cry from what these entities would pay if their property—even just the land portion—was taxable.
The tax exemption creates a perverse incentive for government and tax exempt organizations to acquire more property than they need. More importantly, these exemptions—combined with over-spending—require higher property taxes on businesses and homeowners.
According to a comparison in the Act 47 plan, property owners in the city of Harrisburg would pay two to three times as much as those in the surrounding suburbs, on average. This high tax burden helps explain why so many are moving out of the city: Harrisburg has lost 45% of its population since it peaked in 1950.
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The Commonwealth Foundation is Pennsylvania's free-market think tank. The Commonwealth Foundation crafts free-market policies, convinces Pennsylvanians of their benefits, and counters attacks on liberty.
Critics of liquor store privatization claim that a CDC study suggests liquor privatization would result in greater social harms. The problem: The flawed study doesn't support that claim, and the Task Force admits that they can't find a link between privatization of liquor sales and social harms. Here ...