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June 2015 Featured Article

Featured Article

The Wisdom in Raising Revenue Regionally
Triad Associates

During the second half of the twentieth century an ongoing battle was waged between cities and their suburbs over economic development. This conflict was largely the product of policies that left cities and their suburbs on the hook for raising tax revenues. Regional economies were left with local jurisdictions competing against each other and no coordinated approaches to promoting economic development and providing regional services.

As a byproduct of the global economy, the relevance of regional economies has increased tremendously in the 21st century. Pressure for municipalities to begin collaborating and attracting new industry to the region from outside is mounting. More urban and dense communities like Morristown or Collingswood, and Jersey City or New Brunswick, are beginning to outpace larger-tract lower density communities in terms of retail activity and population. The ability for different community-types to complement each other is an asset that can mitigate the past use of controversial city annexation practices.

In addition to these changes, several studies have demonstrated that city and suburban economies are linked even though other demographic data suggests they are very different environments. In 2005, the Kansas City Federal Reserve Bank released a study on population growth in 58 metropolitan areas from 1970 to 2000. The findings revealed a distinct correlation between urban and suburban community growth. Suburban growth slowed the more a city’s population declined, and when urban centers grew, their suburbs would grow at similar rates.

Findings like the ones revealed by the Kansas City Federal Reserve are significant as they debunk the necessity for local municipalities to compete over the same development projects. Collectively, all local economies are in the same boat. One highly effective technique to encouraging regional cooperation is what is simply referred to as regional cooperative agreements.

For example, in the Denver metro area, a regional agreement was signed in January 1987, which laid out shared economic principles for the region. Since then, the mayors of Denver and surrounding areas gather monthly to meet on economic plans. Having practiced regional economic development for more than 25 years, metro Denver was able to create a culture of trust where every municipality is willing to cooperate as they see their neighbors are exercising the same behavior.

Facing worldwide competition from nations with lower wage rates makes this practice an increasing priority here in the United States. When local governments compete for a corporate headquarters or stadium, they are focusing on moving the same game pieces across the same side of the board.

Published June 2015.

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