A new suburban Walmart comes with tax revenue, crime, and economic development

How exactly does a new Walmart change a suburb? Here are at least a few factors to consider:

From its opening day to June 30, 2017, officers responded to 445 calls for service at Walmart, 166 of which resulted in arrests, according to records obtained by the Daily Herald. That means police were called to the store an average 1.2 times per day in its first year…

Walmart announced in 2012 its plans to close an East Dundee store and build the Carpentersville supercenter less than three miles away, prompting a lengthy legal battle between the company and the two villages. Walmart is expected to receive $4.3 million in tax increment financing funds ­– property taxes above a certain point in the area that would have gone to local governments — for the new store…

Though he declined to disclose specific sales numbers, Rooney said the new Carpentersville store has generated more sales tax revenue than East Dundee reported losing…

Already, the supercenter has significantly increased traffic and economic interest on the village’s east side, he said. Plans are moving forward for constructing a new five-tenant building and an O’Reilly Auto Parts on the store’s outlots.

To be honest, many suburbs cannot afford not to welcome Walmart into their communities. It is rare to find a user for a decent sized portion of land along a major road that will bring in so much tax revenue and provide jobs. The increase in crime can be chalked up as simply part of doing major retail business (I assume there may be bumps with other major retailers or shopping malls) and may not be a huge issue if it is largely isolated to the Walmart site.

In the long run, there are additional factors to consider including the local business climate with the behemoth Walmart in town (more competition for certain businesses), the opportunity cost of what else might have operated on that site, and the image of having a Walmart and related businesses. There is a reason more exclusive communities turn down big box stores and large strip mall areas. Furthermore, the fate of East Dundee could soon befell Carpentersville; if Walmart eventually wants a better deal or a bigger store, they can simply move and bring their benefits (and problems) to a different suburb.

As I suggested above, given these short-term and long-term outlooks, most American suburbs would choose to welcome Walmart. From whence the Walmart came does not matter while the tax receipts can be blinding to many.

Automated jobs could reduce tax revenues

I don’t know how accurate these figures are but it is an interesting argument: people might worry about losing jobs to automation but what about losing tax revenues?

The United States is in danger of losing more than one-third of its tax base thanks to increasing automation in both manufacturing and service sectors. Self-driving vehicles, self-serve kiosks, increases in manufacturing and energy production efficiency, and declining retail numbers all contribute to what is likely going to be a significant problem in the coming decades…

Conservative estimates put future job losses at 20 million with some estimates going up to as high as 70 million. When someone loses their job, they stop paying taxes, while their employers stop paying payroll and other types of taxes at the same time. Compounding the issue is the fact that many people who lose their jobs start to depend on the economic support of the government, along with their families…

A growing population and dwindling jobs will result in much higher levels of unemployment in working-age adults than we see now. To top it off, the number of people on either side of the working-age spectrum (under-18, over-67) are growing substantially. Something has to give at some point, whether that means the advent of a basic income system or substantial corporate/capital taxes, the transitional period we are currently in cannot last forever.

Something to keep an eye on. I could imagine this causing particular problems at the local level as less federal and state money is available at the same time that residents may have a harder time paying property taxes and other local fees.

How many suburban entertainment centers can one region have?

Schaumburg is looking into creating a new entertainment district out of underused properties:

Schaumburg trustees Tuesday approved a $6.58 million offer to buy the two single-story office buildings just north of the village’s convention center and Renaissance Hotel to help develop a new entertainment district and reconfigure Thoreau Drive.

The 110,000-square-foot Woodfield Green Executive Centre lies on the north side of Thoreau Drive and just across Meacham Road from Zurich North America’s new headquarters…

The long-term plan is to hold the property to sell to one or more developers interested in building more restaurant and other entertainment venues near the southeast corner of Meacham and Algonquin roads.

This sounds like a typical suburban strategy today: take properties that are not doing well or even abandoned (see efforts to utilize closed grocery stores) and start generating revenues through new entertainment use. Stores come and go but theaters and restaurants can come together to create a vibrant distract that will generate property and sales tax revenues for years to come.

This did lead me to a question: within the Chicago metropolitan region, how many entertainment districts can the region support? If many suburbs are trying to pursue these goals, can most of them sustain successful districts? There are already a number of successful or established districts: Evanston, Arlington Heights, Schaumburg and Woodfield, Rosemont, Gurnee Mills, the Oak Brook-Yorktown corridor, Naperville, plenty of other downtowns with lively scenes and regular festivals and events (Geneva, Aurora, Elmhurst, etc.) and countless shopping centers that are transitioning to lifestyle centers. I assume there is a saturation point where these districts start losing people to each other. Of course, this might be mitigated by two factors: (1) continued population growth so that everyone can share from a growing spending pie and (2) specialization among entertainment districts that could help each remain competitive.

Another thought: how often do entertainment districts simply reproduce existing patterns of wealth and the distribution of higher-end commercial properties?

Balkanized suburbs and declining local revenues

A story about several suburbs outside Philadelphia highlights a problem facing many suburban communities: how can they counter declining revenues when residents and businesses move away?

Pennsylvania’s Delaware County is a crazy quilt of municipalities. Just to the west of Philadelphia, it is home to some of the oldest suburban communities in America. It is dense, with more than half a million people packed into townships and boroughs as small as a half square mile. Such tight confines can make governance difficult under any but the best conditions.

If a neighborhood starts to change in a way its middle-class residents don’t like, they can move a few miles to a newer house, a better school district, and lower property taxes. The communities they leave behind are faced with the impossible math of declining revenues, rising taxes, and an increasingly needy population…

But Hepkins’ most attainable plan is his ongoing effort to lash Yeadon together more tightly with its neighboring municipalities. He dreams of creating a non-profit 311 call center that could cover the six eastern Delaware County municipalities served by the William Penn School District. This centralized office could connect residents with immigration, veteran, and senior services…

The mayors of Lansdowne and East Lansdowne have been receptive to Hepkins’ advances, but his other three counterparts are hesitant. Even if the local politicians do overcome their own parochial interests, it’s an open question how much resource-sharing between six struggling municipalities would accomplish. A system incorporating the region’s more prosperous communities would be far more advantageous, akin to the revenue-sharing policies utilized in the Twin Cities metro region. But nothing like that is being seriously discussed in the Philadelphia area.

Several thoughts come to mind:

  1. This is a reminder that suburbia is much more diverse than the standard image of white and wealthy communities. Suburbs have increasing numbers of non-white and poor residents and there are various types of suburban communities ranging from bedroom suburbs to industrial centers.
  2. Local governments are often very reliant on property taxes. And Pennsylvania has a lot of local taxing bodies though it trails Illinois. Thus, suburban communities are very interested in wealthier residents as well as businesses that can bring in money through property taxes and sales tax revenue. This creates a kind of competition that is difficult for everyone to win.
  3. A number of metropolitan regions and urban communities in the United States have considered ways to band together to tackle common economic and social issues. This can be hard to do because one of the features people like about the suburbs is having more local control. Moving local revenues to another community – even if it is needed or might benefit the region as a whole – can be a hard sell, particularly in better off suburban communities.

I suspect we’ll see more and more stories like this in the years to come.

Maine towns dissolve local governments amid budget issues

Many Americans want more local control but what if the local government can’t pay the bills? A number of towns in Maine have dissolved their local governments:

At a time of rising municipal costs, local governments around the country are looking for ways to rein in tax bills, pursuing privatization, the consolidation of services, mergers and even bankruptcy…

But in northern Maine, as operating costs have increased, the economy has stagnated and the population has aged and dwindled, a handful of struggling towns have pursued the unusual process of eliminating local government entirely…

Under state law, dismantling a local government takes 12 complex steps, often over at least two years, including legislative approval and a series of local votes. When a town deorganizes, state agencies and the county administer its services, like snow removal, policing and firefighting. Children are assigned to appropriate schools, often in a nearby district. Town-owned buildings and land are sold or held in trust by the state or the county. And every local government job is eliminated…

Other states have unorganized or unincorporated areas, but in Maine about half of the land is Unorganized Territory. The area predates the state itself — it was laid out when Maine was still part of Massachusetts and new settlers were expected to flock there. But the harsh climes of Maine’s wild lands, as they used to be known, never filled out with enough people to self-govern.

This last paragraph may be key: because of particular settlement patterns in Maine (which may be largely due to ecological factors), it is difficult to maintain municipal government. Wouldn’t this be a perfect situation for townships or county governments? For example, the township structure in Illinois is used as an illustration of an unnecessary layer of government in a state that has the most governmental bodies in the country. But, a local government serving a broader geography could be a helpful middle ground that allows residents to feel like they can have input while dispersing the costs over a broader area.

If the local government is officially dissolved, what marks the community? An understanding among local residents? Are there even any municipal boundaries or are these decisions then left to other bodies (like the Postal Service)?

More broadly, it would be interesting to see how many communities have “disappeared” in the United States in recent decades. I have found a few of these in my research on suburbs but it tended to happen prior to the 1970s through annexations and mergers.

More Chicago suburbs hiring staff

Perhaps this is another sign of a more positive economy (and more tax dollars): some suburban governments are hiring again.

According to a Daily Herald analysis of 61 suburbs, 31 of them added the equivalent of 139 full-time jobs during the fiscal year that ended April 30, 2015, for most suburbs and Dec. 31, 2014, for others.

But 16 suburbs eliminated the equivalent of 46 full-time jobs and 14 towns held the line on the head count from the previous year, the analysis of the suburbs’ most recent audits show…

Still, the vast majority of towns are operating with much smaller staffs than just a few years ago. At its peak seven years ago, employment by the 61 towns was nearly 10 percent higher with the equivalent of 13,251 full-time jobs, compared to a low point of 11,977 full-time equivalent positions two years ago, according to the analysis…

According to the analysis of the audits, the 61 towns in suburban Cook, DuPage, Kane, Lake, McHenry and Will counties first saw significant job reductions in 2010, when they reduced their workforces by 3.8 percent.

While this analysis is interesting, more background might be helpful. Suburban governments today have to balance efficiency (meaning keeping tax increases small or cutting the budget) and quality of life (the suburban life that many of the residents who moved to the community want to continue and enhance). This is not easy to do; residents tend to want more for their money and many might be convinced that government can always cut waste (or at least cut the money they don’t personally care about or benefit from). But, at some point, employees are needed.

This article suggests that a number of the new hires in suburban communities are part-time employees to limit the benefits costs. I’d be interested to see data on whether having more part-time employees in local government leads to better service and community outcomes.

Testing a pay-per-mile tax in Oregon

Looking for more revenue, Oregon is starting a test program of paying for miles driven rather than gasoline used:

The program is meant to help the state raise more revenue to pay for road and bridge projects at a time when money generated from gasoline taxes are declining across the country, in part, because of greater fuel efficiency and the increasing popularity of fuel-efficient, hybrid and electric cars.

Starting July 1, up to 5,000 volunteers in Oregon can sign up to drive with devices that collect data on how much they have driven and where. The volunteers will agree to pay 1.5 cents for each mile traveled on public roads within Oregon, instead of the tax now added when filling up at the pump…

Private vendors will provide drivers with small digital devices to track miles; other services will also be offered. Volunteers can opt out of the program at any time, and they’ll get a refund for miles driven on private property and out of state…

Drivers will be able to install an odometer device without GPS tracking.

For those who use the GPS, the state and private vendors will destroy records of location and daily metered use after 30 days. The program also limits how the data can be aggregated and shared. Law enforcement, for example, won’t be able to access the information unless a judge says it’s needed.

 

I suspect a number of governments will be interested in how this test works out. One big hurdle to overcome would seem to be privacy, though government tracking of vehicles may not be far off anyhow (through cell phones, insurance company monitoring devices, black boxes, toll booths/devices, license plate readers, etc.). The argument about deincentivizing electric or hybrid cars doesn’t really hold up because these vehicles still use the roads and add to the maintenance burden. Yet, ultimately this will be about revenue: is this a better model for bringing in the money needed for roads?