Friday, August 3, 2007

Benign neglect

Is the city of Milwaukee a victim of "benign neglect" by the state of Wisconsin as suggested in a recent Bookings Institution report? Those are strong words, but when looking at how much or how little Milwaukee receives in economic development grants and loans from the state, perhaps this idea deserves a closer look.

The Brookings study blames state governments throughout the Midwest for not adequately investing in their older industrial cities. The report suggests that state regulatory, tax and incentives structures are skewed against cities with burdensome infrastructure costs: "At best, these communities have been treated with benign neglect, with state programs and investments focused more on managing their decline than on restoring and sustaining their economic and fiscal health. At worst, state policies and investments have actually worked against them, encouraging growth in newer communities at the expense of cities and their residents."

Michigan is highlighted as a state where "fast-growing, middle class places with above-average tax bases were granted sometimes two or three times more of every kind of subsidy" over that of poorer central city communities.

Wisconsin's Legislative Audit Bureau (LAB) recently released an audit of state economic development programs showing a similar pattern. For example, despite the city of Milwaukee making up 15% of Wisconsin's population, it received only 9.5% of the state incentives from 2001 - 2005.

Other geographical disparities also noted in the LAB audit:

"Projects in eight counties that were not economically distressed received 21.3 percent of the grants and loans awarded during our review period"
"On a per-capita basis, Milwaukee county's grant and loan awards were $2.71 below the statewide average of $30.38."

None of the audit's many recommendations, however, addressed the skewed distribution of financial assistance away from distressed areas and toward areas of wealth in Wisconsin. Instead, they focused on ensuring accountability and effectiveness of such incentives.

A recent Watchdog Report in the Milwaukee Journal-Sentinel (MJS) included a chart showing incentives flowing to communities like Madison, Sheboygan, Oak Creek and Brookfield - communities that are not in economic distress. Nevertheless, attention once again centered on accountability and effectiveness.

Yes, accountability and effectiveness do matter, but shouldn't we also make sure that financial incentives reach areas of the state with the greatest need?

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