Disparities in capital funding

It would hardly come as a surprise to anyone who is familiar with Baltimore neighborhoods in disinvested areas that capital expenses for public spaces and facilities have not been distributed equally across the city. It is kind of discovering that winters is colder than summer. However, the fact that uneven distribution seems to be like a natural law one can take for granted is precisely part of the problem.

Capital expenditures in the FY 2017 budget

What is surprising, however, is that even two years after the uprising, which has widely been diagnosed as a result and indicator of disparities, the unequal investment of public dollars in public spaces is still so lopsided. Apparently 2:1 in favor of more affluent areas looking at a five year period.

What is also surprising is that the Baltimore Department of Planning even conducted an analysis of those spending patterns. Details of the study are not available, unfortunately, except for what is included in a SUN article published in Wednesday's edition. Equitable spending is not tracked in Baltimore's budget reports.

Over the past five years, the budget allocated an average of $15 million for projects in Baltimore neighborhoods where more than 75 percent of residents are white. In areas where more than 75 percent of people are minorities, the figure was $8 million. (Baltimore SUN)

Many don't know that per Baltimore's charter the Department of Planning develops with City agencies the annual Capital Improvement Program (CIP). The discrepancy findings amount to a mea culpa confession, a productive step if change is truly desired.

The average neighborhood with more than 40 percent of residents below the poverty line was allocated $3.5 million in funding, while areas where fewer than 20 percent of residents lived in poverty received $14 million. (Baltimore SUN)

Sources of the Capital Budget 2017

It is easy to point the finger trying to assign fault with prominent individuals (the Mayor etc). Personalized blame is also largely unproductive and fails to see the nature of the problem. The uneven distribution of capital dollars rarely stems from individuals malignantly trying to keep the poor poor, but instead, is the result of a system of exclusion that has been carefully developed over decades and typically comes in the guise of fiscal deliberation and economic laws. No doubt the profit maxim directs private capital which goes where the risk is low and a return on investment. But shouldn't it be different for public dollars?

Many don’t want to see the elegant design of the policy of exclusion. Where we are is exactly where we are supposed to be” [by that design]. If race based policies got us here how can we do now  race free policy?”  (Michael McAfee, Policy Link last week at the Hopkins 21st Century Cities Symposium)

It is astonishing to see how much public money tracks the pattern of private investment, even though public expenditures are expected to counteract some of the injustices the private economic system inflicts. But most public money comes from private sources, chiefly property taxes, and it looks as if that money typically doesn't make it far from where it originates. The city study indicates that it tends to be spent exactly where the property tax income is the highest even though that certainly isn't  where it is needed the most.

The presence of such a City discrepancy study comes on the heels of  a series in the Boston Globe about racial disparities there (A brandnew Boston, even whiter than the old). Public spending inequalities have long been studied, especially for schools, (The dramatic inequality of public-school spending in America, Washington Post, May 2014), but also for public parks. (Inequality in American Public Parks, CityLab, October 2016).

The inequities continue down to much more mundane levels such as the quality of sidewalks, or the number of non functioning streetlights. This remains true, even though Baltimore has recently made specific efforts to counter-steer that pattern with a few high profile projects such as the North Avenue streetscape project between Washington and Asquith Streets which was completed earlier this week or a few years back the median landscaping of Fulton Avenue or a new community school in East Baltimore. McCulloh Street in Druid Heights traverses the area with the highest poorest health outcomes in Baltimore. It got recently repaved and is nice and smooth now which is nice as a gesture, even when overhead one can still find Baltimore's oldest traffic signals in their original 1950s condition, but repaving is only a gesture and a beginning for all the other investments still needed.

The disparity study doesn't even include most of the dollar expenses of the department of Public Works which has the biggest budget of all city departments.

To reach their conclusions, the planners analyzed five years’ worth of capital budgets, mapping city building projects and looking at demographic data. They cautioned that there are gaps in their analysis. They could not get geographic information on projects like road paving, and some school construction programs also were excluded.
The team did not consider spending by the Department of Public Works, which accounts for three-quarters of the spending this year, in part because much of the department’s spending is court-ordered under a long-running environmental case. (SUN)

Baltimore City's budgeting isn't done without a sophisticated framework of tools aiming to deal with all the problems a shrinking city would encounter in an effective manner. Anybody who wants to discuss how the city's money is spent should take a look at the 322 page 2017 budget plan which includes outcome based budgeting, closely monitoring a large number of metrics and trends based on desirable outcomes. This type of budgeting had been an innovation of the previous mayor.

Outcome Budgeting is a budget process that aligns resources with results. The budget is organized at the service level around the City’s seven Priority Outcomes. Instead of starting from last year’s spending and adjusting allocations up or down, in Outcome Budgeting we start with what results matter most to citizens. Outcome Budgeting:

 Addresses fiscal constraints

 Rewards innovation

 Measures performance

 Makes the budget process more transparent  (2017 Budget)

Planning Director Stosur is heavily engaged in the Baltimore Green Plan. I recall him a few month ago holding up a tree canopy plan which clearly showed that Baltimore's poor neighborhoods also had the fewest trees. He seemed genuinely concerned with the fact that one after the other GIS map showed inequities that patterned very close to the infamous red-lining maps in which HUD outlined areas they considered high risk for loans based on poverty and race. Then and now, identifying poor areas as too risky for investment perpetuates a spiral of decline which has gone on for a century or longer. Jules Howie of the Upton Development Council recently explained this vividly when she talked about the same type house fetching $390,000 in Bolton Hill on one side of Eutaw Place and only $90,000 in her community on the other side. Eutaw Street follows the old HUD red-line and for decades deprived residents on the "wrong" side of asset development and wealth creation. This made them unable to obtain home equity loans or do substantial repairs or upkeep on their stately homes, perpetuating the cycle long after redlining was banned and a Reinvestment Act mandates compensatory investment.

How would the city go about adjusting capital spending so it becomes more equitable? When Councilman Ryan Dorsey speaks about his Complete Streets bill he maintains that his bill would look not only at desirable outcomes but also at needs and would allocate resources where the needs are highest. A needs-based allocation of funds would, indeed, address inequality and equity. However, it wouldn't always be fiscally prudent. While cities don't need to make a profit, they still need to see a "return on the investment", in terms of budget policy that means that expenditures should leverage income that keep a budget stable and ideally pay for themselves, most notably, by increasing the tax base. In spite of a shrinking or stagnant population, Baltimore has managed to increase proceeds from property taxes, the largest source of city income. Proponents of a equity based correction of expenditures argue that the city cannot afford not to make investments in disinvested areas since without improvements there public safety and decent education cannot be achieved. Both are a key condition for growing population, home values, wealth and tax base.

Baltimore City Property Tax Revenues over the years

Much has been written about how unequal schools are across the nation, within states, and even within one school district like Baltimore City. The City's school system is in constant money trouble because large vulnerable populations require additional resources. In light of looking where the system can cut cost, school closures are proposed based on lower student numbers. A strictly outcome-based budget would probably allow cutting schools with low student numbers. However, if equity is put into the equation, the school system would not propose to close a community school in Sandtown, such as Pinderhughes, because it provides exactly the type compensatory services to the entire community where the need for those services is the highest.

The consideration of equity must be included into everything the city does. Planning's new data analysis, imperfect as it may, be is the right step in that direction. City budgeting, though, is complicated and doesn't lend itself well to simplistic slogans and solutions.

Klaus Philipsen, FAIA