It’s not a divide, it’s an opportunity

I’m in Washington this week for the National League of Cities Congressional Cities Conference. NLC’s research department just released a report that should turn the “rural-urban divide” debate on its ear. “Bridging the Urban-Rural Economic Divide” suggests that rural and urban areas will succeed to the extent they recognize that they need each other.

We’ve all seen plenty of data that shows rural areas have not seen the same level of economic recovery as urban areas. But NLC shows that the same data reveal some surprises, including the fact that rural areas of Wisconsin have seen much higher rates of growth in the formation of high-value businesses (businesses that export a high percentage of their products). The report makes a strong argument for looking at economic activity in clusters, recognizing that there are both rural and urban elements to most forms of product development.  

The Report was written by Christiana K. McFarland, a research director at NLC. Here’s a link to her short blog post on Bridging the Urban-Rural Economic Divide. The blog includes a link to the report itself.

 

Dark Store is dead. Long live Dark Store.

I’ve never been a fan of zombie movies, but the Dark Store saga is beginning to look like one. For a significant number of property taxpayers: Beware, Dark Store zombies continue to walk the state. The solution to the problem will (almost-but-not-quite) certainly not be resolved by the Legislature this year.

For those of you who aren’t political junkies, Thursday, February 22nd was the last scheduled day for the State Assembly to be in session. Our two legislative proposals to close the Dark Store property tax loophole and its sister the Walgreens loophole were not on the list of bills to see resolution. We had been told the week prior that they would not be taken up.

But a day or two beforehand, we started getting phone calls from Representative Brooks, the bills’ author. He still had hope that at least part of one of the bills could be amended onto another piece of legislation. A large number of Republican State Representatives did not want to go home for re-election without solving the Dark Store problem, which will start to show up on property tax bills this year, and they were encouraging Brooks to find a solution.

In addition, Representative Kevin Peterson had seen the damage caused by a large property tax shift in the village of Manawa and he was determined to get something passed to pull back the 14-percent tax increase imposed on residents and small business by a reassessment of a single large manufacturer in that community.

Despite Brooks’ and Peterson’s best efforts, opponents of the bill dug in. The manufacturers’ lobby, Wisconsin Manufacturers and Commerce (WMC) refused to accept any compromise. At the urging of Brooks and Peterson we agreed to change after change, narrowing after narrowing and WMC continued to say, “Nope.” Finally, at 11:00 p.m., we were presented with a solution that didn’t fix the Dark Store problem (it didn’t even mention it) and made permanent the sister loophole, Walgreens. We finally said enough and said no. (Ironically, the legislative leadership then promptly went to reporters to tell them that WE were unwilling to compromise. Sigh; politics is such fun.) The Assembly wrapped up its business and, barring another unexpected zombie uprising, there will be no Dark Store solution this session.

What’s next? For communities with a large amount of national-chain retailers, you can expect to see a steady or even increasing stream of property tax appeals. The Legislature’s lack of action, coupled with the significant financial incentives that big box retailers and others have to chase a tax cut/tax shift make that outcome inevitable. Attorneys who specialize in this area of tax law often work on a percentage of recovery, which makes the appeal a freebie for the property owner.

One more thing. Every other property owner will pay more. There will be another Manawa or two, as tax attorneys learn how to adapt the Dark Store strategy to Dark Manufacturers, Dark Banks, and so on. An enterprising attorney will attempt to expand the Walgreens loophole to other commercial properties.

The only ones who won’t be able to at least make a run at this loophole are home owners, apartment owners and small businesses. They will be left holding the bag while their big box neighbors happily fill it up for them. Dark Store is Dead. Long live Dark Store.

Tea leaves and local control

The outcome of Tuesday’s special election in Wisconsin’s 10th State Senate District sent ripples, if not shock waves, through the political waters. Democrats are thrilled and point to the unexpected win of their candidate, Patty Schachtner in a Republican-leaning seat as one more sign of a national pro-left wave that has been building since the Presidential election. Republicans are publicly-voicing concern that the electorate’s not hearing their message. As a card-carrying member of the political chatterers, I’ll admit it’s been a couple days of fascinating tea-leaf-parsing. And one of those leaves seems to be pointing at local control.

For the first time in a long time, I heard the words “local control” in the post-election analysis. Both Republican and Democratic commentators say that local issues, including control over local zoning, played a prominent role in the election. Republican Candidate Adam Jarchow, as a member of the State Assembly, was an outspoken opponent of local governments on land use. Jarchow was well-known, well-funded, and according to all reports, ran a very credible campaign. And then he lost. And land use played a big role.

“We absolutely believe local issues motivated people in this race,” said Democratic opinionizer Stan Gruszynski in today’s Wisconsin State Journal.

“Local issues matter and Republicans have to re-evaluate how they’re talking about them,” said Republican pundit Jim Villa.

Both men were alluding to Jarchow’s support for limits on local zoning regulations.

One election does not a wave make. Two comments in the newspaper do not signal legislative intent to restore the full spirit and meaning of the Home Rule Amendment to the Wisconsin Constitution. A huge anti-city, anti-village bill, AB 770, continues to move through the Legislature. But just maybe Tuesday’s election will freeze bills like this in their tracks. Or at least it may cause Legislators to think about how they will explain votes for such bills to the village board members back home. That’s a pretty good tea leaf.

For profit government

Local governments should earn a profit. It’s not a profit measured in dollars and cents, the profit of local governing is goodwill that can be spent when it’s time for a difficult decision.

cropped-baraboo-1826829_960_720

In his 2016 State of the City address, the Mayor of Anaheim, California called for a social capital campaign. He said, “Our goal was to change the culture of our widely diverse city through simple, powerful and unsolicited acts of kindness. This will create what academics refer to as social capital, or another way to refer to it is building social muscle so that when inevitable challenges arise, we as a city have the strength and resiliency to respond effectively.”

It’s time for us to shift our mind-set. Local governments in Wisconsin need to make a profit. But I’m not talking about a financial profit. The profit of well-run local government is social capital. A local government that has no social capital is as vulnerable to an unexpected crisis as the shoe shop that has no cash in its bank account. Without social capital, that government will one day face a crisis and the operators of the local government will be out on their ears. The profit motive needs a place in city and village government.

Profit in the business world is result of doing a good job at the manufacturing, marketing and distributing aspects of company operations. It’s the result of taking care of customers and taking care of business. In many ways profit is the most honest measure of the degree to which a business is run properly.

Social capital serves the same purpose in government. You earn social capital the same way a business earns economic capital; by doing the basic things right and by being trustworthy. And you lose it the same way; by messing up the basics and doing business in an un-transparent way.

A business owner stockpiles economic capital so he or she can use it as needed or as desired when a new challenge or a new opportunity comes along. A company that has been run profitably has money in the bank to invest in new equipment, expansions or acquisitions. But if the company is operated on a shoestring basis, or is just “getting by,” the company is at serious risk of failure when a key piece of machinery breaks. There are parallels in the local government world.

A well-run city stockpiles good will and social capital by plowing the snow quickly and efficiently; by picking up the garbage at a predictable time week after week, and by making land use, and fiscal decisions that are fair, logical, and best for the community at large. City hall is open, the lights are on and the citizens can see what’s going on, and what’s going on makes sense to them.

Like a business tycoon who uses some of his stockpiled wealth to grow, a city may dip into its store of profit for new projects or initiatives. There’s a major employer considering relocating to your city, but it will require infrastructure. Your citizens’ longstanding wish for a recreation center, community center, band shell or central park may finally have reached maturity. Now it’s up to you to make it happen. And that takes social capital. Because, in a democracy, no decision comes without a cost. Even “obvious” decisions will have detractors; citizens who have a different perspective and a different vision. Just because a community center makes perfect sense at that intersection, the people who live on the other side of town may feel neglected.

In addition to diversity of viewpoints, there’s the skepticism factor. The public has been conditioned to question everything their government does. Only a community that has a good supply of social capital will have enough citizens’ trust to be able to form a consensus and move forward.

Profit and social capital are even more indispensable during times of crisis. A business that loses its biggest customer had better have money in the bank to see it through the “lean” times until it can identify or grow new customers. If a product suddenly exhibits a defect, the company will have to invest in recalls, repairs, and rehabilitating its tarnished image. All of these things require investment.

Municipal crises come in just as many shapes and sizes. Chronic potholes, unexpected crime sprees, fiscal mismanagement and more are the unexpected calamities that challenge city and village governments every day. Those are the times when it’s not “nice to have” social capital; it’s essential. Like your business cousin, you will need to tap your social capital to recall the product, repair the damage and rehabilitate your city’s tarnished image. If you don’t have that capital, you can count on being available for other employment immediately following the next election. And even worse, your community will miss a new economic opportunity, lose faith with its citizens, and see its image in the region tarnished.

You can’t borrow or deficit-spend your way to social capital prosperity. There’s only one way to earn social capital. That’s by attending to the basics and doing things by the rules. It requires making tough decisions the way democracy intended them to be made: by listening to both sides, analyzing the data fairly and reaching a compromise that benefits the most people. And by doing it day after day after day.

Running a city is hard. Leading and operating a village always has been and always will be challenging. The problems can be older than anyone currently-working for the municipality, or they can be as sudden and new as a phone call on a Friday afternoon. It can’t be done for free. And it can’t be done without social capital.

That’s the Local Perspective. What do you think?

The local perspective?

Welcome to the Local Perspective Blog. I’m Jerry Deschane, Executive Director of the League of Wisconsin Municipalities. I was thinking that I should open this new conversation with a witty thought, a deep and incisive perspective on local control, or, if all else fails, a quote from Benjamin Franklin. Something to jump start this blog and get us both thinking deep thoughts.

Nah.

That’s not what local government’s all about, is it? Local government isn’t a place of deep philosophical discussions about the woes of society. It’s a place where we plow snow so people can get their kids to school and where we make sure sewer systems run silently and perfectly twenty-four hours a day, seven days a week so we can keep…stuff…out of peoples’ basements.

Local government is made up of a bunch of citizens who just get things done; things that need to get done. We fight fires because fires need to be fought. We pave streets because streets need to be paved. We watch out for one another and protect one another…because we need to be watched out for and protected.

I’ve been involved in or observing local government pretty much my entire life. My dad was a trustee on our village board where I grew up. My mom was the Village Treasurer for a time. Other family members have also been involved in local government. I’ve spent several years as a local radio reporter, attending school board meetings, city council meetings, county board meetings and more. I served two terms on a public school board and currently sit on a charter school board. I have a few thoughts and opinions about how local government works…and why it doesn’t sometimes.

And then there’s the League. I’ve been with the League about 4 years, but the League itself has been around a bit longer. 119 years, to be precise. We were created by the Mayors of Wisconsin who realized they needed a place they could get together, share ideas and talk.

And they needed an organization that would allow them to speak to the Governor and legislators in an organized way. Because, believe it or not, over a century ago, the legislature kept passing laws that made their jobs more difficult. Shocked, just shocked, aren’t you? Yes, the more things change, the more they stay the same.

The point of this blog is simple: to continue the Mayors’ tradition of getting together to talk. To help cities and villages around Wisconsin do their jobs better. And from time to time, we’ll use this blog to speak to the public and the legislature with an organized voice.

Most of the time, the voice you’ll hear on this blog will be mine. I’ll be here week in and week out, but I hope you join me now and then. If you’ve got a thought on something I wrote, send it to me. If there’ s an issue of local government that you have an opinion about, send that to me too. The best blogs are like the League itself when it’s at its best; a conversation.

What’s your local perspective? Let’s talk.