From cautionary example to "city on a hill": revitalizing Saint Louis may require an innovative regional taxation model.

Author:Libonn, David

To grasp the depth of the challenges facing many American metropolitan areas ("metros") today, it is necessary to consider these metros in the context of the laws and policies that have helped to form them. After all, although agglomerations of human population have existed in a more or less organic form for thousands of years, (1) the modem American city is, in many ways, a deliberately planned and constructed political entity. (2) As the apex of the built human environment, urban landscapes encompass and reflect our needs, our desires, our aspirations, and our struggles. (3) These motivating forces shape policy, policy shapes our cities, and the cities we live in contribute considerably to shaping our lives. (4)

Although the city is a place where many different things exist in close physical proximity, it can also be a place of stark division. (5) Nowhere are human contrasts more clearly displayed. While this diversity of perspective, culture, and experience can be a great asset, (6) it has also proven itself a significant obstacle to constructive policymaking. (7) Cities are places of tremendously concentrated wealth and power, on one hand, and nearly unimaginable poverty and destitution on the other. (8) As urban areas have grown spatially, the division between these classes has grown as well. (9) By the end of the 20th Century, many American metros consisted of a blighted and crumbling urban core surrounded by much more modem and affluent suburbs. (10) This pattern, in some ways, reflects the aggregated effects of a multitude of individual choices." However, it is also the result of some controversial planning and policy decisions, many of which have had consequences that were neither predicted nor desired. (12)

The unchecked proliferation of individual municipalities within many metros (13) has proven to be a persistent obstacle to successful regional integration; as local government structure exists today, these municipalities are often incentivized to compete with each other for investment, business, and tax revenue. Such local interests often conflict, particularly in the short term, with broader regional goals. (14) A more holistic view increasingly embraced by urban theorists takes better account of the potential value of inter-municipal cooperation. (15) Metropolitan intermunicipal revenue sharing is a particularly promising example of this type of regional cooperation. (16)

The purpose of this Note is to consider and explore the policy decisions that encourage metropolitan fragmentation and to advocate for a more region-focused municipal revenue distribution plan in the St. Louis metro area. In order to assess the challenges and opportunities presented by such a plan, an understanding of American urban development and policy is required. Part I will provide a brief overview of pertinent American urban development patterns since the Second World War. Part II will examine several examples of metropolitan-region revenue sharing, focusing specifically on the Twin Cities Fiscal Disparities Program utilized in the Minneapolis-St. Paul metro. This will be instructive for analyzing the potential for inter-municipal revenue sharing within the St. Louis region, through an investigation of the region's local government structure and unique challenges. While the plight of St. Louis is by no means singular, the magnitude of the city's need is quite staggering. Population loss on a per capita basis is worse in St. Louis than in any other major American city, (17) and an unfortunate decision to legally separate St. Louis City from St. Louis County has greatly exacerbated the city's isolation from its metropolitan region. Part III will delve further into these issues and examine the possibility of adopting a regional revenue-sharing plan in the St. Louis metro. Although political opposition could make implementation of such a measure difficult, I suggest that revenue sharing could work to increase St. Louis metro's national and global competitiveness while reducing some of the region's stark socioeconomic disparities.


    The modern American urban landscape was born in the years following the Second World War. Since the War and its attendant, military buildup helped bring America out of the Great Depression, (18) policymakers feared that the return of peace would foster a return to economic hardship. (19) Partly in an effort to encourage economic growth, the Federal Housing Administration and the Veterans Administration instituted loan programs that "provided mortgages for over eleven million new homes." (20) These federally subsidized mortgages often cost less than rent payments, encouraging single-family home ownership. (21) Furthermore, the programs "discouraged the renovation of existing housing stock," in favor of new construction. (22) At the same time, the building of the Eisenhower Interstate Highway system, soaring rates of automobile ownership and declining support for public transit subsidies increased the individual mobility (and, ultimately, car-dependence) of the American urban population. (23)

    These suburban pull factors dovetailed with forces pushing upwardly mobile urbanites out of the city. Cities were perceived as dirty, dangerous, and overcrowded--fearful places to live and raise a family. (24) Fear, often intensified by classism and racism, was a major factor in driving the wealthy and the middle class out to the suburbs. (25) Although restrictive covenants had kept many neighborhoods racially and economically homogeneous, (26) the Supreme Court's 1948 decision in Shelley v. Kraemer effectively ended the practice. (27) As neighborhoods were opened up to new and diverse residents, existing residents sold their homes and left for the newly developing suburbs in droves. (28) Home values in these neighborhoods collapsed as sales skyrocketed. The perception that cities were crumbling had become self-reinforcing.

    Many former city residents whose housing values had collapsed during white flight sought protection from the perceived dangers of desegregation in their new suburban towns. (29) While restrictive covenants had been effectively eliminated, newly incorporated municipalities in the suburbs could exercise their zoning powers to achieve similar results; by zoning extensively (or exclusively) for large-lot, single-family housing, for instance, many suburbs ensured that only the wealthy could afford to move in. (30) Wealthy residents pay more taxes but have access to the same services. (31) From a narrow economic standpoint, it is decidedly in the interest of a municipality to seek residents who will contribute substantially to its tax base while making relatively few demands upon it. (32) Unfortunately, as suburban towns compete with each other and with the central city for a strong tax base, metropolitan regions become more and more economically divided. (33)

    Metropolitan-area fragmentation is driven by many factors and is, to a certain degree, desirable. In fact, some urban theorists have hypothesized that municipalities operate most efficiently within a certain population range. (34) Therefore, some degree of political fragmentation is advantageous if it prevents municipalities from becoming unwieldy and inefficient. Moreover, different groups of people may prefer different styles of municipal incorporation and governance. Localists defend municipal proliferation by pointing out that a multiplicity of separate political units provides a multiplicity of options. (35) Potential residents may then choose the mix of taxes and services that they prefer. (36) In some cases, municipalities also incorporate to avoid being annexed by their neighbors. (37) Incorporation, in these cases, allows a municipality to retain self-determination and continue to cater to its residents' needs and desires; the localist advantages of efficiency and choice are thus preserved against consolidation.

    Beyond a certain point, however, fragmentation becomes detrimental to a metropolitan region. Every municipality may share common goals, including the provision of quality education, housing, and healthcare, and the reduction of pollution, traffic, corruption, and crime, but provision of similar services by multiple entities is redundant and inefficient. (38) In many metros, each municipality has its own city council, police force, and school system. Rather than sharing knowledge, innovation, resources, and funding, these parallel service providers compete with each other for position within the region. (39) Public perception that a community is safe or has a good school district is enough to raise property values there, generating higher municipal revenues and encouraging further investment and growth. (40) The opposite perception produces the opposite result. (41) From the perspective of an individual, self-interested locality, a decline in the quality of services provided by its neighbors can be a boon for its own future development; residents have an incentive to abandon declining towns for their more successful neighbors. (42) This self-interested localism is at odds with any attempt at regional cooperation.


    Various responses have arisen to counter the challenges posed by municipal fragmentation and the socioeconomic stratification that it engenders. Some cities have attempted to solve the fragmentation problem by annexing their suburbs, effectively eliminating those municipalities as separate governmental entities. (43) Others have consolidated city and county governance by extending city boundaries out to the county line. (44) Still others have created limited-purpose regional authorities to oversee one or more specific needs of the metropolitan area. (45) Examples include regional transit authorities that control every mode of mass transit within the metro (46) and regional sewer districts that administer wastewater...

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