The Failures of Urban Governance

There are many things one can say about the return of Donald Trump to the presidency. From the perspective of incumbent big city governments — not just the mayors but the broader political classes that run these cities — none of them are great. Many of our biggest cities are going through periods of transition and crisis. There is little reason to think that the president-elect and the incoming Congress will be particularly interested in providing aid to address these problems, except perhaps by pointing out that they are happening in cities governed by Democrats. And voting returns suggest that these cities’ own electorates are frustrated with the governance on offer. 

Local governments will have to look inward for solutions. There are things they can do, but embracing them will be hard. 

While voter attention was understandably elsewhere over the last few months, political and policy crises emerged in our biggest cities. 

• Chicago’s school board chose to resign rather than adopt Mayor Brandon Johnson’s proposal for the debt-ridden school district to borrow more to pay for salary increases and more spending. This was yet another salvo in the ongoing conflict between people concerned about Chicago’s increasingly tenuous budget situation and the powerful Chicago Teachers Union, which, with political stances across most policy issues, increasingly looks like a political party — a union that was essential to getting Johnson elected.

• Los Angeles faces huge budget problems of its own, problems that are getting substantially worse as tax revenues have not kept pace with increases in public spending. 
• San Francisco looks to be on the verge of tossing out or turning over a substantial portion of the Board of Supervisors. The mayor, London Breed, also lost in her bid for reelection. This is part of an anti-incumbent wave that has hit politicians of a variety of political stripes, but in this case it also reflects frustrations with the city’s ongoing housing shortage, crime problems and chronic disorder.
• New York City’s mayor, Eric Adams, has been indicted by the federal government on corruption charges and is scheduled to face charges in court in April, although President-elect Trump’s re-elevation may save him.  

I could go on, with more cities and more problems, but you get the idea. In facing these problems, cities cannot count on help from the federal government. If Kamala Harris and Democrats in Congress had won the election, perhaps cities like Chicago or Los Angeles could have reasonably expected federal support. After all, during the pandemic, cities and states received unprecedented federal fiscal support from Washington. With a Republican Congress, similar generosity seems almost unfathomable. Big-city crime is a subject of substantial interest from Republicans, but, given federal budget problems and the desire to cut taxes, it seems unlikely that Congress will include aid to address it. 

Nor are our biggest cities likely to be able to look to state governments. While many states saved money between the post-COVID boom and the mountains of federal aid that has been showered upon state and local governments, Illinois, California and New York all face severe budget problems of their own. If Congress decides to pay for tax cuts — which President-elect Trump has promised — with reductions in Medicaid spending, it will further harm state budgets.

On top of this, voters appear to be fed up with the Democratic Party coalitions governing cities. While the whole country shifted towards Trump, the areas that shifted the most were big cities, where Democrats still won but by much less than before. And many of the big city officials that were on the ballot, like L.A. County prosecutor George Gascón and Mayor Breed, were tossed out, despite having very different politics from one another. 

If big city governments are going to address their problems, they are going to be on their own. 

While this is, I’m sure, a scary proposition, it is hopefully a wake-up call as well. The deep reason for these crises — both social and political — is that big-city liberal governance isn’t working in many domains. Big-city zoning regimes have combined with suburban exclusion to limit supply of housing, creating a cost-of-living crisis, reducing economic growth and generating homelessness. Crime is falling, which is terrific, but police continue to allow a great deal of public disorder that drives residents away from using mass transit and public parks, and leaves drivers afraid to leave their cars on the street. Despite debt limits and balanced budget rules, cities like Chicago, Los Angeles and New York face structural deficits, and/or huge debt burdens in the form of underfunded pension systems, creating the likelihood of budget cuts in the near future. The cost of building infrastructure in American big cities — much higher than in international peer cities — is a disgrace. 

Notably, these problems should be particularly pointed for egalitarians — because the harms they create are felt most strongly by the worst off. 

City governments cannot sit idly by and expect someone to help them. Instead, they should embrace an aggressive package of reforms, seeking to increase growth and pare back policy ambitions, in the name of providing governments with enough resources to provide necessary basic services to residents. Let’s consider some of the possibilities.

Zoning. Cities need to rezone for housing growth, aiming particularly at their richest areas. The existence of high property values in most cities suggests that in general, people still very much want to live in them (though to be sure, some cities have seen major population outflows). Rezoning to create the conditions for a building boom will encourage population inflows and stimulate budgets, creating a larger fiscal base to deal with legacy debts. Doing so will also mitigate homelessness. Proposals like City of Yes in New York are only the beginning. What Austin did recently, a really substantial rezoning that goes deep into neighborhoods, is more like it. Building code reforms are also very promising. 

Policing disorder. Public spaces like mass transit, parks and the like simply cannot be abandoned due to a refusal to enforce rules against anti-social behavior. Whether policing for greater order — stopping things like public urination and petty theft — reduces serious crimes is a debated issue. But policing disorder on its own terms seems very likely to increase quality of life for residents and investment by firms, as well as improving local economies and generating revenue. One part of this has to be building sufficient homeless shelters, which requires overcoming neighborhood opposition. But urban public spaces cannot be abandoned out of a refusal to enforce rules, as it will harm local economies and reduce the ability of cities to attract residents.  

Cut spending and (probably) raise taxes. Local budgets are not like the federal budget. Municipalities cannot inflate their way out of deficits, nor can they reduce transfer payments. Instead, local spending is mostly on employees providing services and infrastructure and has to be paid with either tax revenue or transfers from other levels of government. A city like Chicago — where one of our most indebted city governments is coincident with one of our most indebted school districts inside a heavily indebted county in one of our most indebted states — will likely need more revenue and to do less (and to pay workers less for it).

Raising taxes is painful and might inspire exit and local hardship; so too will service cuts and salary and pension givebacks from public workers. But that’s what local debt, particularly local debt that isn’t tied to specific infrastructural assets like pension debt, means; such debt is just budget cuts and tax increases forestalled. It is also possible that some jurisdictions will, like Detroit a decade ago, need to resort to municipal bankruptcy, to force creditors and pensioners to share some of the pain with current city residents who bear the costs of service cuts and tax increases.  

In order to convince residents to bear this pain (and indeed not to leave town), cities will need to convince them that they are providing value for money. When making cuts, the focus should be on the very basics of urban governance — roads and public transport, public safety, basic services.  

There’s no guarantee the political crisis in these cities will spur them to action. The absence of partisan competition — or even quasi-partisan competition of the type “machine vs. reform” politics used to provide — is one of the sources of urban policy drift. Here’s hoping that the political discontent that led voters in heavily Democratic places like the Bronx to shift substantially toward Donald Trump provides our big city political leaders with the pressure to act. Notably, in cities that have adopted pieces of this agenda, mayors like San Diego’s Todd Gloria and Austin’s Kirk Watson did well in elections on Tuesday. 

If cities addressed their disorder, zoning and fiscal problems, it would make their urban policy choices fit their residents’ stated national political values more closely. Want more people to have access to reproductive health services? Make space for them by allowing more buildings in places where abortion is legal. Want to address climate change? Figure out a way to build a subway for prices that aren’t seven times what they pay for the same thing in Paris or Rome. 

Addressing the problems of urban governance would provide a fillip to the national Democratic Party as well. It’s no accident that Republicans regularly criticize Democrats by pointing to governance failures in our biggest cities. Crying that this is unfair may be true, but better yet would be taking steps that address the problems directly. 

After Tuesday, our biggest cities will have to do that on their own.