Tuesday, March 27, 2012

Voting With Your Feet

I've used this phrase to describe my relocations over the years. For instance, I moved from Cleveland to suburban Parma Ohio in 1999. There were a lot of reasons I chose Parma, including the city income tax schemes in effect in Cuyahoga County. Mainly, both cities charged me 2%. My job was in Parma, and if I moved there, I would save 2% per year. Doesn't sound like much, but if you work 5 days a week and 50 weeks in a year, you preserve 5 days labor. A whole week! It becomes a no-brainer. Besides- the commute was shortened from 20 minutes each way to 5, with walking or biking a possibility.

So, I fairly snickered at the Indy Star's somewhat shocked and breathless report about people moving to the suburbs, and wealth drain from the core city.

Indianapolis residents didn't give the city a vote of confidence in the past decade.

A new study shows Marion County lost a net 86,000 residents to its suburbs from 2000-2009, a larger out-migration than in four comparable-sized Midwestern cities (Cincinnati and Columbus in Ohio; Kansas City, Mo.; and Nashville, Tenn.)

Those lost residents accounted for about $180 million in total income now residing in the seven surrounding counties.

The core-to-suburbs migration data were the focus of debate at a recent annual housing summit held by Metropolitan Indianapolis Board of Realtors.

"I was really surprised to see the enormous income-level drain" that accompanied the moves, said Aaron Renn, an Indianapolis consultant and researcher in urban trends who compiled the data.

Where's the surprise? The move I made has been happening in Cleveland since the 1950s. People blame the drop in population on many things, but absurdly, never consider tax policy in their evaluations. I sure did! And, the greater your income, the more of your earnings you preserve. This is why all of the suburban counties in Cleveland gained population, and why regionally the population gained.

We moved to Indy in 2002, at 58th & Keystone. The neighborhood was okay, but clearly was one that could as easily rise as fall in short order. I've had enough experience in those neighborhoods to know that if you don't have tremendous wherewithal to improve the area real fast, you get out. My son went to IPS for half a year, and that was all we needed to know that we were either going to spend $10,000+ per year on private school, or we were going to move.

So, we moved to Fishers, in Hamilton County, in 2004. We're here for the long haul, even with certain political dissatisfaction. After all, it's still a very nice place to live, the taxes are low, the schools are great in enormous part because the parents are vastly more interested in the academic success of their children than, say, the parents were at IPS School 70. As the article shows, we aren't alone.

The move-outs "could be because our suburbs are more attractive or it could be because our core (Marion County) has more challenges," said Todd Sears, a researcher at apartment developer Herman & Kittles Properties, who has also studied the trend.

Tax rates, crime, school choices and housing prices also undoubtedly figured into people's decisions to leave Marion for the surrounding counties, said Renn and other experts.

Could be? Did you talk to anyone who made the move at all? You couldn't get me to move back into Indianapolis, or Cleveland, until my kids are out of school, or 2028.

This is a discussion I often have about public schools with my libertarian friends. Go ahead- tell people that you want to abolish public schools overnight. What rational decision will the parents make, with three kids, earning $50,000/year as a household, when they understand that your policy will cost them $30,000 a year? They damn well have to vote against you.

Similarly, while there may not be a tremendous tax difference between Indy & Fishers, Marion County & Hamilton County, there is the idea that, leaving inflation out of the picture, two kids in the Fishers schools = the cost of property taxes; two kids living in Indy going to private schools = $20,000 x 12 years = $240,000.

That's the kind of math you cannot ignore. So, yeah. For a quarter million, maybe, just maybe people find it worth it their while to get out of an inferior school district, where the crime rates are higher, where the taxes are higher, where the insurance is higher, etc.

So, we voted with our feet. Until the folks who set policy in urban cities understand this, they will continue to see population loss to the suburbs.

The suburbs need not get too smug, though. Parma is not a place I would go back to, either. It didn't learn a thing from the history that unfolded before its eyes. It repeated all the mistakes Cleveland made. It too has high taxes, declining schools, rising crime rates, and all the other factors that chase people of means and awareness out. There's nothing particularly special about the suburbs apart from being created by people of means who are success-oriented. They don't always stay. Today's shiny new suburb can indeed become tomorrow's slum. Policy sets the tone.


Doug said...

I have no particular disagreement with what you've written. But, it made me think of a political science class where the professor noted that the communications revolution had made it possible for the fried egg city model to turn into a scrambled egg model. Central cities used to have more leverage because their hubs were communications centers. The same dynamic probably degrades the leverage of a nation-state as well.

Also, to your last paragraph, at some point we'll run out of viable green fields to develop, and there will be nowhere left to run. But, for all I know, that day could be a long way off.

Mike Kole said...

Your two paragraphs tie together very neatly. a) Telecommuting is only going to make it easier to live remotely, and b)Anytime folks want to get serious about curbing sprawl, all they need to do is create cities that address the issues of schools, taxes, and crime.

The Urbanophile said...

Mike, my surprise was how bad Indy scored vs. peer cities. Did not expect it to be so bad.

The problem with the suburbs is structural. Those "high taxes" that come later are the result of kicking cans down the road. Fishers is in for a rude awakening 2-3 decades from now when it is fully built out, old, and with its own legacy costs. Then I guess everyone will "vote with their feet" to move to Ingalls or something.

Here's the real key. Governments accumulate liabilities because those liabilities attach to territories not residents. Hence, residents have an incentive to promote policies that defer costs, then skip town will the bill comes due. It's like being able to run up a credit card bill in someone else's name and then skip town.

Mike Kole said...

I agree about kicking the can. As I pointed to my experience with Parma, I've seen this before. But, what are we going to do? Chain people to municipalities?

You provoked a deeper thought about what people see. I'm not convinced that residents have any clue at all about the liabilities governments accumulate. I know they see the things on the surface that I pointed to- tax rates & school quality, and then throw in how people maintain their properties. What don't they see? How government grows staff with long-term liabilities, tax abatements that expire and later cause employers to look elsewhere, spending structures that count on growth but which is finite.

That latter exactly describes the communities in Hamilton County, especially Carmel & Fishers. The forced annexations struck me as quick fixes- huge infusions of population which elected officials saw as adds to the tax base without having to provide new infrastructure. Exactly right that this is tomorrow's liability.

Are residents responsible? Sure, in the sense that they elect people based on party label, and without knowing much else. The officials are the ones who know the structures before them, and do what they do to show a great bottom line while obfuscating the looming threat. So, I hold them responsible.

In any case, as long as people are free to move about they will, and they will leave. If taxes have to be raised to pay for infrastructure in the future (they will), we'd do real well to not have other costs come along to add to that bill. This is one thing municipalities seem loath to do- to resist the building of bureaucratic empire. Go to Cleveland and that's all you'll see left standing: a bureaucratic empire, crumbled infrastructure, and poverty. The bureaucracy is tremendously overvalued.

Anonymous said...

You could have moved 4-6 blocks north in Indianapolis and had good schools and lower property taxes.

Mike Kole said...

I guess IPS School 70 did a great job of un-selling us on schools in Marion County as a whole. Absolutely no regrets with Fishers and would not dream of going back to Marion County. May also flee Fishers & Hamilton Co, but for now it's very good.