Citizinvestor, Public Goods and Distribution Politics

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Joel Mathis is worried that Citizinvestor – a sort of Kickstarter for municipal projects – will lead to a growing disparity between high-income areas and low-income areas, as higher income folks are able to top up the level of public goods in their neighborhoods and make them even better.

It’s something to keep our eye on, but ultimately I’m not so concerned about it. In any city, there are going to be more projects people want to do than can realistically be funded out of the general budget, and things are going to end up on the backburner. If neighborhoods want to raise some extra money to buy even more municipal projects and services, that seems like an attitude cities should encourage.

Citizinvestor might also be helpful for shoring up funding for core public services. Some things city governments pay for are legit public goods, but some are really just club goods that mostly benefit a small group of people. For instance, the park at Rittenhouse Square is really a public good. People from all over the city use that park, as do tourists. The people who live close by benefit most, but they don’t capture all the benefits, which are shared pretty broadly. By contrast, smaller neighborhood parks that are used mostly by the immediate neighbors are more like club goods. There’s a concentrated benefit for the people who live close by, but it’s hard to see how the whole city benefits from maintaining what are basically nice private lawns.

Or take street trees. There’s a lot of evidence that street trees increase land values, and thus nearby home values. That’s great, but see the wealth transfer there? The city uses general revenues to pay for street trees, and then individual landowners reap the windfall as higher selling prices. The new AVI assessment system will capture some of that rise in property values as higher taxes, but the public cost/private benefit dynamic is still playing out.

None of that strikes me as a great social injustice, but I do think it would be a good idea for Philly to unload some of the club goods it currently funds out of general revenues onto the immediate beneficiaries, via Citizinvestor or in conjunction with some other scheme like a Parking Benefit District. You could create Parking Benefit Districts, where curb meter money goes back to the block its raised on, but give neighbors that money as Citizinvestor credits to spend on public improvements in their neighborhoods.

By localizing payment for club goods, Philly would have more revenue for basic public goods like police and fire protection, education, etc.

This entry was posted in Budget, Economy.

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