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Subsidies, the Federal Government, Racism: The Problem with Today's Central Cities By Tony Smith Remember when we used to think of suburbs and cities as polar opposites? The suburbs were lily-white, wealthy, bland, and peaceful. The houses all had big lawns. The city was a place full of crime and pollution, where the underclass, immigrants, and artists lived. Politically, the central cities invariably aligned themselves with the Democratic Party. In return, the federal government would pour money into public housing, public education, mass transit, urban development and renewal grants, and welfare programs. The suburbs, home to most of the nation's wealth, would largely foot the bill for these programs. Conventional wisdom tells us that these infusions of cash have failed. Despite the special treatment, places like Philadelphia, Baltimore and Cleveland have continued to lose population and their school systems have worsened. Thus, cities still receive federal subsidies, but in these times of welfare reform and decreasing federal subsidies, and decreasing federal involvement in local affairs, the amount of these subsidies has sharply declined. It's as if the suburbs have decided they don't want to spend their hard-earned money bailing out old, declining places that don't ever seem to improve. So why are densely populated urban centers so much less successful than Green Acres? Is there something inherently dysfunctional about cities? No. While it might appear that cities have a never-ending appetite for cash, it is the suburban way of life that has been highly subsidized for decades by the federal government. It has also been bolstered by local policies and governmental structures that allow the suburbs to thrive at the expense of their larger, older neighbors. After World War II, the Federal Housing Authority created the modern homeowner's mortgage. Before the Authority began to publicly guarantee long-term mortgages, home buyers could often only take out loans for periods of five years. This restricted the privilege of home ownership to the relatively limited slice of America that could afford such harsh lending terms. The FHA published extensive guidelines for banks as to which neighborhoods were acceptable for issuing federally-backed mortgages. These took the form of metropolitan area maps, with individual districts ranked on a five point scale from grade A (ideal for investment) to F (extremely undesirable for investment). The FHA used race, religion and the age density of the built environment as criteria for rating the desirablility of these neighborhoods. Lily-white, recently-developed suburban areas usually received the "A" rating. Places with extensive racial mixing, or significant black or hispanic populations were most often given an "F." This practice was known as redlining. Even otherwise acceptable neighborhoods that had noticeable Jewish populations were downgraded to "B." Thus, the vast majority of federally-guaranteed mortgages in the postwar years went to white suburban homebuyers. The FHA represented a massive transfer of funds from the pockets of city dwellers to newly-minted suburbanites. But it took another large-scale federal subsidy for the suburbs to really explode: the Federal-Aid Highway Act. This 1956 program dumped billions of public dollars into the construction of high-speed roads that allowed single family detached houses to sprawl over the hinterlands of metropolitan areas nationwide. These days, the federal government is not susbsidizing suburbanization at anything like the scale that it did in the 1950s. But still, it grants tax credits to mortgage payments but not to rent payments. This tilts the balance in favor of areas where homeownership tends to be more predominant (suburban areas). Furthermore, about 30% of the funds for highway construction and maintenance don't come from the gasoline tax, they come from general tax revenues, paid by all Americans, even those who don't own cars. And this is just barely scratching the surface of the numerous subsidies the automobile receives in this country. We all breathe the air polluted by drivers. We all foot the bill for costly overseas strategic involvements aimed at protecting our oil interests (the Persian Gulf War, for example). The suburbs are almost invariably much more automobile dependent than central cities, and thus reap the majority of the benefits of artificially low driving costs. But federal subsidies pale in comparison to regional inequities in explaining why cities are in such poor fiscal health. In most metropolitan areas around the United States, the central city is surrounded by numerous small suburban jurisdictions. Each of these local governments is empowered to perform planning and zoning. Many of these townships and boroughs, especially east of the Mississippi, are only several square miles in size, and do not contain large populations. Thus, local elected officials are extremely responsive to their constituencies, and are unwilling to make unpopular decisions. In order to keep property tax rates low, suburban towns commonly zone out low and moderate income residential development, such as apartments and prefab housing. If the entire population is composed of ultra-wealthy families living in large houses on four-acre lots, there will be few social service burdens, and lots of property tax revenue for the local government. By zoning out the needy, the suburbs dump these populations on the central cities. Cities tend to have large amounts of inexpensive, dilapidated housing stock, and tend to offer much broader arrays of social services for the poor, handicapped, mentally ill, and elderly. For example, Baltimore contains 13% of Maryland's population, but 56% of its welfare caseload. In order to support needier folk, cities must have higher tax rates than suburbs. This in turn encourages businesses and middle class residents to either depart for more favorable tax situations, or not to locate in the city in the first place. Without these more productive taxpayers, cities are forced to raise tax rates again. The concentration of poor and minority populations in central cities is not only unfair, it leads to grave educational dysfunction. The US Supreme Court's 1954 decision in Brown v. Board of Education supposedly gave school districts the mandate to desegregate. Because blacks and whites tended to live near different neighborhood schools, many areas relied on busing in order to achieve better racial balance. There was so much resistance and public outcry against busing policies however, that they were mostly abandoned. Today, there is little discussion of the fact that our schools are still incredibly segregated, almost half a century after Brown. The reason is that Americans still tend to live with others of the same race and class. Zoning policy encourages them to do so. So life looks grim for central cities. Sure, there is talk of urban renaissance, even in Cleveland, but these glowing reports focus on new baseball stadiums, convention centers, aquariums, and other showcase developments taking place in downtowns and oriented towards visitors from out of town. But the oversimplified images of city and suburb that I have used to this point were never completely true, and are becoming more and more false. The suburbs are not monolithic by any means. In most metropolitan regions in the United States, both the poorest and wealthiest jurisdictions are located outside the central city. Older suburbs display all of the social problems that we would traditionally associate only with places like The Bronx or South Central Los Angeles. They are also frequently less well-equipped to deal with these problems than central cities, because they have fewer institutional resources. It is these older suburbs that are the key to restoring equity in America's metropolitan areas. Little can be done to change federal government's massive subsidies to automobile drivers and homeowners; within states and regions, however, it is possible to make serious inroads against the zoning, property tax and educational inequities. Older suburbs are often politically dominated by Reagan Democrats, who are loath to help out the central cities many of them have struggled to leave for so long. But they have more in common with these cities than they do with the newer, wealthier suburbs on the metropolitan fringes. In the Minneapolis region, a percentage of local property tax revenues from every jurisdiction are pooled and redistributed to cities and towns on the basis of need. This arrangement was achieved through coalition-building. City and older suburbs overcame their mutual distrust and voted as a bloc in the state legislature. There are many groups in every metropolitan region that could potentially benefit from such coalition building. Environmentalists are starting to realize that it is better to live in a central city than in a car-dependent, large-lotted suburban location. The elderly realize that the social amenities, public transit, and walkable environments they need are more prevalent in cities. Perhaps these groups, in concert with inner-city and older suburban residents, can work to eliminate some of the many subsidies that push us to constantly develop on the metropolitan fringe. Tony Smith is pursuing his Master's Degree in Urban and Regional Planning at the University of Pennsylvania. |
