Is federal funding bad?

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It could be hurting our cities

By ROBERT MEYEROWITZ

Talk of cutting federal funding to cities has hung in the American air like burnt gunpowder since the last election — but how much of a threat is it, really? Could it even be a blessing in disguise?

That’s some of the gist of a recent piece up at the Urban Milwaukee website, which is devoted to city planning. Entitled “How Federal Funding Hurts Cities,” it carries the provocative subhead “Liberals and cities would be better off opposing funding.” It forms an interesting parallel to the argument that when states take federal funds, they can be hamstrung by one-size-fits-all federal policies that usurp their sovereignty.

The author, former Milwaukee mayor John Norquist, first takes up the proposition that urban areas, which tended to favor Hillary Clinton in the last election, could stand to lose federal funds under a Trump administration — and indeed, we’ve seen the threat made more real around issues such as immigration enforcement and sanctuary cities. However, Norquist points out, they’re not getting that much federal assistance now.

The median percentage of direct government expenditures of the 150 largest cities is smaller than what many people may assume –just 5.5 percent, according to data compiled by the Lincoln Institute of Land Policy, a Cambridge, Massachusetts-based nonpartisan foundation. Detroit receives 4.8 percent of its expenditures from federal sources; Buffalo, 4.3 percent; Milwaukee, just 2.9 percent.

According to data for 2014, the last full year available at the Lincoln Institute, Columbia had $38,826,000 in federal revenue, which amounted to 6.27 percent of its total revenue and 6.2 percent of its direct government expenditures.

Charleston, the only other South Carolina city in the top 150, had $28,621,000 in federal revenue, which was 4.1 percent of its total revenue and 4.37 percent of its direct government expenditures.

“Local governments and their lobbying associations have been remarkably unsuccessful at obtaining dollars from the national government,” Norquist writes.

“They won a victory in 1972 when President Richard Nixon signed Federal Revenue Sharing into law. It provided no-strings-attached dollars to municipal budgets. Most cities shared in these transfer payments and poor small towns in rural states were among the greatest beneficiaries. But after some small cuts by Presidents Gerald Ford and then Jimmy Carter in this program, the coup-de-grâce was delivered by President Ronald Reagan when in 1986 Federal Revenue Sharing was repealed. In the competition for a share of the federal pie, cities just couldn’t compete with more powerful interests such as military equipment makers or the farm lobby and its cherished crop subsidy program.”

Owing to federal guidelines for land use, housing, and other development, however, even small contributions can have big effects — warping what some planners say could otherwise be wise choices.

Federal programs, “particularly those that fund infrastructure and housing, actually can reduce the value of cities,” Norquist writes. For instance, “The Federal Housing Administration has, since its creation in 1934, encouraged low-density housing and has assigned extra risk to housing proposed to be in close proximity to retail. … In the last decade the market demand for urban living in walkable mixed-use urban neighborhoods has grown even while the federal government regulates against it.”

In short, federal housing policies can destroy downtowns.

When it comes to transportation, federal programs “enable and favor long commutes over short trips involving walking, bicycling or [mass] transit,” Norquist writes. “Federally funded projects tend to be gargantuan, serving travel over long distances: expressways and airports rather than the networks of streets and sidewalks that serve as the setting for commerce and the vitality of cities. … To the federal government, and to most states as well, long-distance commutes by car are deemed appropriate for lavish subsidy while movement by walking, bicycle or transit are afterthoughts.”

Reached by phone, Norquist said the same effects are visible in South Carolina, based on his visits. “The state is obsessed with highway-building and making cars go faster. It tends to just feed the highway contractors and be done with it.”

And then there’s the Jones Act, which is another example of federal policy that hurts port cities such as Charleston. Formally known as The Merchant Marine Act of 1920, it’s a protectionist measure, still in force, which mandates that passengers and goods shipped by water between two points in the United States must be transported on U.S.-built, U.S.-flagged, and at least 75 percent U.S.-crewed vessels. Other ships must leave the U.S. and make port before they can visit another domestic port.

The effect has been to virtually eliminate maritime passenger transit. “There used to be boats going from Charleston to Savannah and back several times a day,” Norquist said. Now, “the reason you have to subsidize Carnival [Cruise Lines] so heavily is that for that ship to go anywhere, it has to first go to the Bahamas — because of the stupid Jones Act. If you go to England, you can ride from Plymouth to Portsmouth, you can take all those trips, no problem. In the United States, there’s no ship that goes from Los Angeles to San Francisco — you’d have to go to Acapulco first. It really [screws] Charleston, because otherwise you’d have passenger ships” coming and going from other coastal cities.

This may be a case of taking with one hand while giving with another. It is also the federal government, after all, vis-à-vis the Army Corps of Engineers, that this week has come up with the money to dredge Charleston Harbor, which would make it the deepest navigation channel on the East Coast.

Norquist added that he didn’t want to leave the impression that he wanted the federal government to do nothing.

“I like the Bill of Rights,” he said, “I like the interstate commerce clause, those are all good because they help to create a market that’s really good for cities and everyone else.”

Otherwise, he said, “Why are these cities looking at the federal government as somehow a blessing to them? When it comes to infrastructure, when it comes to housing finance, it’s bad.”

Vince Graham, the Charleston developer of walkable neighborhoods and former chair of the state Transportation Infrastructure Bank, concurs. Asked to name ways in which Charleston has suffered from taking federal funds, Graham says, “The interstate being built right into the heart of Charleston — as with many things that the federal and state government do, their policies with respect to transportation are fraught with moral hazard.

“People chase after these dollars that the federal or state governments provide because when the feds have these matching funds programs to the state, it looks like they’re getting fifty-cent dollars. The incentive is to build more roads so they can get more of those fifty-cent dollars.

“In the case of I-26, that was originally supposed to end outside of the city and come in on existing surface roads, but then in 1957 or 1958, the decision was made to extend it all the way into downtown Charleston. That decision never would have been made were it not for 90 percent matching funds, because that’s what they were doing then. So they have a monetary incentive to build those things, even though, over the long term, it doesn’t make sense. It doesn’t solve the traffic problem, it often contributes to making it much worse, and it’s very harmful to property values adjacent to these interstates. You create this blight and separate neighborhoods.”

These may not be new ideas — skepticism about the federal government predates its formation — but their consideration may be more timely than ever before in a rapidly urbanizing South Carolina. New population estimates released Thursday by the U.S. Census Bureau show Greenville as the fourth-fastest-growing large city in the country, while Charleston reclaimed its title as South Carolina’s largest city with an estimated population for mid-2016 of 134,385.

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  • Bill

    Want different results? Quit sending the same people to Columbia year after year.