The state takeover of Detroit is a nice reminder that there is no 10th amendment for cities and counties. As Michael O’Hare points out, states made the national government, but cities and counties did not make the states. Despite the efforts of the new nullification advocates to confuse people about this, municipalities derive their power from state governments, not the other way around. Local governments are at the mercy of what state laws say they can and cannot do.
The upshot of this is that when we see a bunch of older Cities of the Third Class all facing the same problems, and failing in exactly the same predictable ways, we can surmise that the problem has less to do with poor decision-making by local level politicians, and more to do with bad state laws governing municipal finance.
And the response to the observation that state municipal finance laws routinely cause older core Cities of the Third Class to fail in uniform predictable ways should be that we need to fix the municipal finance laws at the state level, where the problem originates. The problem with Act 47 is that it treats the symptoms at the city level, instead of treating the disease at the state level. The state has the authority to dissolve municipal governments and create large County tax bases for education and public safety services. But instead they’ve stood by while tax base fragmentation cannibalizes older cities, and pretended that the predictable problems Cities of the Third Class are facing are comeuppance for bad individual choices, rather than systemic problems caused by bad state laws.
There may well be some cities that would do a little better with county-wide services (Allentown and Bethlehem might be two of them). But the problem with most third class cities in PA has nothing to do with Act 47 or municipal finance–they have wealth generation problems caused by the loss of key industries and replacement by, if anything, low margin retail and other similar business models.
How big does Johnstown’s, or Altoona’s, or New Castle’s, or Erie’s tax base have to be to break even? In many of those cases, they are poor cities surrounded by poor small towns (sometimes poorer). Inflexible pensions and needless overhead drain resources from where they could really be needed more. Detroit is a city that was devastated by the decline of the auto industry and leveled by poor choices and mismanagement (sometimes criminal) to rob those who remained.
An even more dire situation for these communities is the percentage of tax exempt properties within their boundaries. When you have 50 percent or more tax exempts utilizing community services and not paying for those services how can any of these municipalities survive. The leverage of PILOT programs is negligible. If the state legislature where to enact legislation to enable communities to garner revenue from the tax exempts a lot of the problems of these cities would be alleviated.
I’d support land taxes for non-profits.