Development Matters

ECONorthwest recently released a report on the long term financial challenges facing municipalities commissioned by the League of Oregon Cities.  The headlines are about benefit costs, and how their growth is far out of line with growth in government wages and property tax revenue.  But the report touches on something I don’t often see mentioned, the connection between development and property tax revenue.

From the intro discussing property taxes (emphasis mine):

Even though property taxes are not directly tied to personal income, it makes sense that the two go hand in hand. As a city experiences growth in population, and as its residents see their incomes grow, they drive demand for new housing and new businesses. This new construction fuels growth in assessed value, and in property taxes.

If measures 5 and 50 are a problem because they limit growth in property taxes, development is a salve that eases the problem.  And note that location matters:

Cities will also experience unequal property tax growth. Cities able to capture new residents and employment growth will experience more property tax growth, whereas cities unable to attract residents and jobs will experience personnel costs that far exceed any growth in property tax revenue.

If it’s easier to develop in Washington County then that’s where development will go, and so will the property tax revenue. 

This is why I get ticked when I see people blithely trying to kill development projects or redlining whole neighborhoods, as if there weren’t a cost to their actions.  Forestalling such development leaves the city and its residents poorer.  Some buildings are worth paying that cost in order to save and some are not.  But an honest discussion of costs and benefits is impossible when you miss one entire side of the equation.

PPS looking grim

Conservatives rail against social security, warning young people not to assume it will be viable when they retire. I feel that way when I look at PPS. Increasingly I think it won't be able to provide an acceptable level of education to my kids. It doesn't mean private school but it does mean I'll treat it like a tool, one of many needed to get the job done.

I wonder how many other parents feel that way?  I wonder what we could do on our own if we put our heads together?

Hospital Concentration vs. Insurer Concentration

 

Here is a very good post on the Incidental Economist discussing the leverage effects on pricing.  The author  posits a “sweet spot” in the middle, ie too much concentration on either the insurer side or the provider side will raise prices.

Something missed:  Regulation.  There is a well established regulatory authority to review insurer pricing and ensure monopoly benefits are passed on to consumers.  The regulatory task actually gets easier and more efficient as the number of insurers drops, and when you take it to the extreme you wind up in Vermont with single payer.  In contrast there is no established regulatory authority over hospital pricing, that’s still the wild wild west.

That suggests the “sweet spot” curve needs to be tweaked…

Hardware vs. Software

The NY Times ran a story this week questioning the value of technology in the classroom.  They cite in particular a showcase district in Arizona that has been pouring money into tech without creating any observable benefit in test scores. 

To me that story highlights a key point:  The “software”, that is the teaching practices and processes that rely on tech are critical to effective utilization.  As one teacher puts it in their signature file,

“It’s not the stuff that counts — it’s what you do with it that matters.”

The conclusion to draw from that isn’t that tech doesn’t matter, it’s that you need to do more then just buy stuff.  You need to think about how to use it, and adapt as you gather experience. 

Flashback:  The Social Life of Information makes the same point about business processes.

Provider Pricing Regulation takes another step closer to reality

in Massachusetts.  The fate of this proposal deserves as much attention as Vermont’s single payer plan.  Both depend on much greater scrutiny and regulation of health care pricing.