Friday, June 12, 2009

Act 47 and the law of unintended consequences - Part II

Trying to make sense of all that is going on with the Act 47 5-year plan being debated Downtown? It all is much much simpler than any of the details would imply. The nexus of city finances and the future of the city of Pittsburgh all comes down to this paper from a few years ago:

Local Revenue Hills: Evidence from Four U.S. Cities. by Andrew F. Haughwout, Robert P. Inman, Steven Craig, and Thomas Luce. NBER Working Paper No. 9686. May 2003

The fundamental question that has to be answered is: where is the City of Pittsburgh right now on its 'Revenue Hill'? Then where will it be if any local tax goes up? Any tax that is with the probable exception of the parking tax which seems to have an unsatiated demand.


Blogger Unknown said...

This comment has been removed by the author.

Friday, June 12, 2009 1:44:00 AM  
Anonymous MH said...

As you can probably guess, my opinion is that Pittsburgh is near the top of the hill. 'Green is Good' is apparently moving to Chapel Hill, which got me thinking about Durham, where I lived before here. I had basically the same priced house, but paid about 1/2 of the property taxes I do now, plus a lower sales tax, plus no local income tax. Also, buying beer and wine was cheaper and more convenient. And, groceries were cheaper because there was no near-monopoly (you had Kroger, Harris Teeter, Food Lion, and Whole Foods). Some things were pricier (car registration comes to mind), but it was much cheaper to live. Plus, there were more potential employeers who were likely to need my skills (Duke, UNC, RTI), which is why I'm guessing no employer ever tried to skip raises for a year.

Friday, June 12, 2009 9:28:00 AM  
Blogger C. Briem said...

some would argue over the hill.

Durham has been known as a low cost place compared to most regions across the country. So I am sure you are right but most regions would fail that comparison as you put it. I suspect the real estate had not been as cheap of late before the more recent economic miasma everywhere.

Note I've never quite seen anything to say grocery costs are higher here. The comparsions we do have show Pittsburgh maybe average if below a bit. Note there had been a lot of food inflation everywhere in recent years so that may be part of what you observe. But that has been true everywhere.

Friday, June 12, 2009 9:56:00 AM  
Anonymous MH said...

I moved years before there was food inflation. Granted, I probably buy an atypical 'basket' of groceries (i.e. more meat, prepared foods, and fruit), but it was more expensive.

Friday, June 12, 2009 11:02:00 AM  
Blogger n'at said...

I believe Pittsburgh met it's revenue hill back when Lawrence was mayor. Pittsburgh, Philly and NYC underwent major population and infrastructure growth after the railroads and prior to eisenhower's highways. Minneapolis size and population has remained steady for 100 years or more, while Houston is really a young town with respect to generational population growth and infrastructure.

So out of the four cities in the study plus Pittsburgh, which one has a built environment for the capacity of nearly 3/4 Million people, but the taxbase of less than 300k?

Friday, June 12, 2009 5:14:00 PM  

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