Center for Policy Research
Financing Central Cities: The Economics Underlying Fiscal Strategy Options With Special Reference to Syracuse City and the Consensus Report
C.P.R. Working Paper No. 204
Michael J. Wasylenko
A consortium of Syracuse City and Onondaga County governments along with a number of local area non-profit organizations have recently organized a commission on Local Government Modernization for the Syracuse area. The Report makes three major recommendation to strengthen the local public sector in the Syracuse region: seek opportunities to share public services across local jurisdictions to reduce costs, adopt the Minneapolis region model for sharing revenues from new commercial and industrial development across localities, and work toward merging Syracuse City government with Onondaga County government. At the same time, current non-city residents would not have responsibility for the city or school district’s legacy debts or post-employment benefit obligations.
The working paper reviews the urban economics and local public finance literature in the context of fiscal viability of central cities. Central cities form the heart of knowledge-based economies and those benefits redound to the entire region in the form of higher property values and incomes. In addition, suburban enclaves have developed in part through discriminatory policies and practices at the federal and local levels and they have weakened the fiscal viabilities of central cities. It also reviews the relevant local public finance literature on city annexation and government mergers, optimally sized jurisdictions, non-profit entities’ payments in lieu of taxes in cities, efficient local government taxes, and related topics. Based on the review, the economic development of a region depends on the economic and fiscal sustainability of its central city. Suburban resident benefit in tangible ways from the economic activities in their respective cities and suburban areas could reasonably devote a portion of their tax base to enhance the resources available to the city to service the city’s legacy debts and other obligations. The working paper concludes with fiscal implications for Syracuse City and its metropolitan area.