A Terminal Case of Economic Deficiency Anemia

The Sentinel calls our attention to another informative Brookings Institute report, "Restoring Prosperity - The State Role in Revitalizing America's Older Industrial Cities." [Entire report in .pdf format is here. ] The New York State information and statistics [here], reveal that virtually every Upstate metropolitan area is economically deficient when compared with other parts of the country. In spite of the bleak Upstate NY statistics, The Sentinel quotes the Rome C of C president that "Rome already is demonstrating plenty of signs that it is rebounding, based on various examples of development and employment growth."

Let's not confuse the heavily subsidized (by Oneida County and others) "development" and "growth" with the genuine items. New York's approach to economic development is to give ever bigger taxpayer supported incentives and special benefits to businesses to partially offset the higher cost of doing business here. A recent example is the Beachnut announcement last week, that its national headquarters will move to near Amsterdam, while one of its major plants in nearby Canajoharie will be closed. Dan at Upstream reported that vast sums are going to be spent by tax payers and even National Grid ratepayers to pull off this transaction -- so much so that it might be better just to give the money away. This "band aid" approach masks the region's underlying problems rather than solving them.

There is so much information in the Brookings report that it will take a while to digest. The following statement caught my attention, however:

Throughout older industrial states such as Pennsylvania (2,633 general governments), Ohio (2,338 general governments), Michigan (1,858 general governments), and New York (1,602 general governments) an enormous number of artificial municipal boundaries require what are otherwise interrelated communities to provide their own set of largely duplicative services to their residents, and at the same time force them to compete for revenue generating development. And it is the central cities that usually lose out: Businesses and residents can locate within a few miles of the core, pay fewer taxes, receive better services, and enjoy all the amenities and benefits the city has to offer, giving them little incentive to actually locate there." (p30 of 84, emphasis supplied).

This is exactly what has happened in the Utica area, is part of the reason why local taxes are so high, and is why this region cannot compete with other regions in the country. Our local interrelated municipalities are spending taxpayer resources duplicating each other and competing with each other. In other parts of the country, they would be one.

Until New York restructures its system of local governments, all the special economic development programs will just be throwing more good money after bad.