Wednesday, August 16, 2006

Cleveland Still Losing Population

With the 2005 American Community Survey recently published, the Plain Dealer has reported that Cleveland's population continues to drop. Despite former Mayor Campbell's 2003 initiative to boost the city past the 500,000 mark, it appears now that Cleveland is on track to drop below 400,000 residents by this time next year. The PD also notes the following trends:

  • Cleveland is "growing older and poorer, and sending fewer teens off to college as it becomes home to more single moms and fewer nuclear families."
  • Cleveland lost 11% of its population in the period from 2000 to 2005.
  • People are moving out of Cleveland and into the surrounding suburbs.
  • White residents left Cleveland in greater numbers than black residents.

The future is potentially grim for Cleveland. If middle-class residents continue to flee the city, Cleveland's income tax base will erode. The departure of middle-class residents will in turn lead to a decline in housing valuations and consequently property tax revenues. The schools, funded primarily by those declining property taxes, will also suffer. And, as a final step in the feedback loop, the declining schools will further encourage middle-class flight. This potential chain of events begs the question: are there any workable options available to the city at this point?

There are indeed solutions, though they will not be easy. Cleveland needs to attack its problems in two ways: (1) increase revenue through redistributive methods, and (2) increase revenue by creating new economic value in the city.

The first solution--redistribution of funds--is likely the more familiar solution for most readers. The basic idea is that if Cleveland doesn't have enough money, it seeks to get more money from outside sources. This includes most notably the state, which underfunds Ohio's urban schools. Campbell acknowledged the issue in one of the Campbell-Jackson debates, but there has been little progress on the matter. Cleveland needs to redouble its efforts in getting the state legislature to better fund its urban schools. This crisis in funding comes at time when Cleveland's schools have made admirable progress. Other fund redistribution can come from the county (via regionalization of cities' services), and (though it pains me to say it) raising its income tax (a large portion of which is paid by middle-class suburbanites who work in Cleveland).

The second solution--creating new economic value--is a difficult one. It is also necessary, because Cleveland cannot simply reverse its economic fortunes by redistribution alone. Cleveland needs to get started implementing some of the solid, revenue-generating ideas that has been proposed over the years. The Lakefront Plan, for instance, has been hotly debated, but no real lasting consensus ever formed. The lack of quality housing in University Circle often gains attention, but with the firing of CWRU President Hundert the issue has lost one of most powerful backers; it remains to be seen whether remaining supporters of UCI development (such as Ronayne) have sufficient political power to break ground on this project. And ODOT's inner belt reconstruction promises to open up a lot more land for development downtown, but political wrangling has slowed its progress. Each one of those ideas promises great new revenues for the city, and each has been stymied by competing political interests.

If Cleveland can't get its act together on both these fronts, its economy will continue to slide. Its population will decline further, as will city revenues. Eventually, Cleveland could become a nationally recognized sinkhole of poverty. If, however, Clevelanders can agree to act on a plan for redistributing funds *and* for implementing new revenue-generating projects, there is some hope. By lobbying the state, county, and neighboring suburbs, Cleveland could potentially bring in more money. By actually implementing some of the very good development ideas, Cleveland stands to create new economic (and taxable!) value within its borders. If Cleveland can successfully employ both tactics, it stands a chance at reversing its decline.


Blogger farside268 said...

You forgot to mention the most viable option for solving Cleveland's population problem -- changing it's name. People are leaving because they've realized they live in Cleveland. Perhaps if you changed the name to something more appealing like Baghdad, Kabul, or "Hey, no Cleveland here, no sir, not a burning river for miles" you could fool more people into staying around.

11:21 PM  
Blogger Mike Kole said...

I left Cleveland, and Ohio, because of taxes. I gave myself an 8% annual raise to leave Ohio for neighboring Indiana.

Do the math: The more you make, the greater your reward for leaving.

8% x $50,000 = $4,000 x 10 yrs = $40,000 saved

8% x $100,000 = $8,000 x 10 yrs = $80,000 saved


If Cleveland, and Ohio, want to be competitive and actually want to attract people of means, it best start by lowering the tax rates.

If Cleveland takes your advice, and it always has pursued 'redistributive' methods, those with means will continue to have great incentive to leave.

The more the tax rate is raised, the more it drives away deeper into the middle class, leaving one great pool of poverty.

So many large cities do this and suffer. Learn, already!

9:16 AM  
Blogger John said...

Sucessful cities never levy their own tax on incomes. The few exceptions are places where powerful forces draw entrepeneurs and wealth - think New York City, Washington DC - so much so that income tax concerns get overwhelmed. Does anybody think Cleveland has that kind of draw? My suggestion for Cleveland is that they eliminate all commuter taxes and local income taxes. If they must get more revenue, try sales and gas taxes. Never an income tax

2:06 PM  

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