Include Financial Sustainability in Comprehensive Planning

Sustainability will get lots of ink in this decade’s comprehensive plans for local governments.  And, to be sure, as is evident from past posts, I agree there are many good reasons for planning and development to reflect environmental costs and other externalities ignored by previous generations.

Still, one critical form of sustainability will remain largely invisible:  Financial sustainability.  Ramsey_co_emv

As cities allocate resources to develop workforce, cultural amenities, quality schools, housing stock, multiple modes of transportation and other initiatives, comprehensive plans must establish an approach for financing these core public functions.  Not only is this as critical as ever, it is also potentially at its most difficult.  Two suggestions for how planners and citizens engaged in this work can consider financial sustainability:

Developing alternatives to the property tax will strengthen cities’ financial stability for years to come; failing to do so will be at a community’s own risk. Beyond the anecdote that seniors are on fixed incomes and are therefore more sensitive to property tax increases, this fall’s polling for school referenda reveal a heightened antipathy to this funding source by voters ages 45-65.  Evidence from the 2006 elections nationally suggests that property taxes are a watershed issue for voters – and the stakes are high for candidates who promise to “solve the problem.”  Long-term public planning needs to include both some analysis of alternatives to the current form of property tax as well as concerted education about the fact that public services aren’t free. 

The relationship between local governments and their state and federal counterparts has shifted in recent years, and the shift may be long term or permanent in nature.  In Minnesota, local government aid (“LGA”) reductions have received much attention as the source of diminished services and increased property taxes; a list of Minnesota cities and the LGA received from 2002-2007 is included here.  The infrastructure and services required for future urban development (in a physical sense and in terms of human resources and capacity) are in Minnesota provided primarily by cities, counties and school districts:  Streets, stormwater and wastewater, to start.

More quality analysis is available today than ever before that reveals the many factors contributing to a robust residential tax base.  Data is available to evaluate the impact of physical amenities integral to formation of a comprehensive plan, on property values and tax base.  For example, view articles examining a comparison of high-profile, big-ticket arts investments to neighborhood arts facilities; the impact of a quality K12 system on local property values; and how nearby parks boost home values.  The volumes of data available through residential listing services even allow valuations of a single mature tree (in 2002, its minimum value was estimated to be $10,000) in a residential yard.

With multiple chapters to update, it’s difficult for municipalities to explore each issue in detail.  Moreover, readers will fairly note that social and political issues transcend municipal boundaries, making efforts to reduce reliance on property taxes (for example) very difficult. However, with federal and state support ebbing, local governments cannot afford not to consider financial sustainability in their long-term planning process, property taxes and all.

GIS map courtesy of Prof. Paul Lorah, University of St. Thomas.