No city can exist without people. Cleveland’s population has declined from nearly 1 million in the 1950s to about 430,000. Many of these people have moved to nearby suburbs, causing city population density to decline from 11,400 people per square mile in 1960 to 6,200 ppsm in 2008. Given the host of problems, complicated business culture, failing public schools, and heavy tax burden that Cleveland carries, it is understandable that so many people have left the city over the past six decades.
Yet, Cleveland is not without hope. Indeed, the city has an advantage over other Rust Belt cities that never had a thriving urban culture. Cleveland residents already enjoy the kind of big-ticket entertainment options that you can only find in large cities. In addition to the Browns, Cavaliers, and Indians, as well as the Rock ‘n’ Roll Hall of Fame, Cleveland has plenty to offer for those with a taste for high culture.
But these cultural amenities are not capable of attracting individuals back to the city. That's because it is economic vitality that drives population growth, not attractions. The orchestra, museums, and theaters in Cleveland are artifacts of an era when Cleveland was an industrial powerhouse and produced tons of cash. Today's Rock ‘n’ Roll Hall of Fame and sports complexes are a monument to the empty promises of Cleveland politicians. They were built with hundreds of millions of taxpayer dollars through sweetheart deals that were developed during Cleveland’s economic decline. These amenities are not the fruits of a vibrant economy. And while the Cavaliers provide a great entertainment option for visitors from the suburbs, you can’t judge a city’s health by the success of its basketball team.
The keys to bringing back people to Cleveland lie with fixing education, encouraging economic growth through pro-business tax and regulatory policy, stabilizing city finances using privatization, and promoting a bottom-up development strategy.
Fixing the education system
The Cleveland Public School System should pursue a decentralized student-based budgeting system, where education funds are attached to each student and the students can take that money directly to the public school of their choice.
Key student-based budgeting principles that improve educational outcomes as well as the transparency and accountability of schools include funding that follows the child to the public school of their choice; per student funding that varies based on a child’s educational needs, with special education students and others receiving larger amounts; and funding that arrives at individual schools in real dollars, not in numbers of teaching positions, staffing ratios, or as salary averages.
Cleveland public schools should also promote charter school models and take a hard line with struggling institutions: Close failing schools. Open new schools. Replicate great schools. Repeat as needed. Using the power of competition will drive success in education. And the better the school system, the more people will want to move back into the city.
Encouraging economic growth through pro-business city tax and regulatory policies
Cities with heavy tax burdens put themselves at a competitive disadvantage with more relaxed localities. Taxes always create disincentives for business growth and expansion. Cities with simple, limited tax structures are much more successful at encouraging business development. Local leaders should be aware of how various taxes can weigh down economic growth.
Entrepreneurism is a vital part to economic growth in cities. Local leaders should work to limit red tape, simplify the regulatory process, and do everything possible to create a hospitable licensing climate for business.
Excessive business taxes, local sales taxes, property taxes, and fees are all more likely to drive people out of the city than build a sustainable tax base. If Cleveland wants to bring people back, it needs to build an environment that encourages business development.
Stabilizing the city's finances and boosting economic growth through privatization
The more fiscally sound a city is, the more attractive it will be to residents. Fiscal stability means no threats of tax increase nor the fear that social services will be cut back. One way Cleveland can look to stabilize its finances and “right-size” government is to leverage the many opportunities that outsourcing brings.
Cleveland may find greater economies of scale, cost savings and/or value for money through bundling several—or even all—services in a given department, such as public works, or departmental subdivision, such as facility management and maintenance, into an outsourcing initiative, rather than treat individual services or functions separately.
It is crucial that local governments identify good performance measures to fairly compare competing bids and accurately evaluate provider performance after the contract is awarded. Performance-based contracts should be used as much as possible to place the emphasis on obtaining the results the city wants achieved, rather than focusing merely on inputs and trying to dictate precisely how the service should be performed.
Promoting bottom-up development
Like a lot of cities with dying downtowns, Cleveland is desperate to revitalize its inner city. But economic studies consistently find that big publicly funded projects—like professional sport stadiums and the Rock ‘n Roll Hall of Fame—often fail to increase the overall economic activity. The politicians who promote these corporate welfare projects have promised that they will stimulate the local economy. But city officials have not learned their lesson. The city’s new redevelopment silver bullet is a new convention center that will require hundreds of millions of additional tax dollars.
In order to promote bottom-up development in Cleveland, and make the city more attractive to people moving in, and not just taxpayer funded sports teams, there are several principles the city should follow:
Protect life and property. Perhaps the most basic function of government is to ensure the personal safety of its residents and businesses. This function includes ensuring residents are physically safe from actual and the threat of crime. A safe city will attract a wide spectrum of residents from college graduates, to families, to businessmen, to seniors.
Ensure government spending is transparent and accountable. Former Mayor Michael White initiated the “citizen’s budget” in an attempt to ensure everyday residents and businesses could both monitor government performance as well as track spending. This transparency is critical in an increasingly competitive environment.
Pay attention to core infrastructure. Potholes count. A road network that links key destinations and maximizes mobility is crucial to ensure people and goods flow effectively at least cost. Well functioning sewer and water systems are essential to support existing businesses as well as support future growth.
For Cleveland to bring the people back they need to realize that real sustainable economic development has to be organic. It can’t be forced through big spending projects. It starts by creating a livable city without an oppressive government.
At the end of the day, city officials need to let go of their bureaucratic inclinations and make Cleveland the kind of city where people are free to pursue their own versions of the American Dream. It needs to be a freer city than it is today.
Anthony Randazzo is director of economic research at Reason Foundation. This article first appeared at Reason.com. This is a companion piece to the Reason.tv documentary series Reason Saves Cleveland with Drew Carey. Watch the series at Reason.tv or YouTube.