Pittsburgh's Next Decade: The Suburbs

[Second in series of occasional posts; read the first one here.]

This is how I began this series:

So long to Pittsburgh's last decade. What will the next one bring? Long-range forecasts are easier in some ways than short range ones; my list of predictions for Pittsburgh's 2010 includes only one sure thing. My view of the next decade is on surer footing. These things take longer to come into focus - and most of them have been emerging for some time already.

But I've been traveling a lot, a working some more, not paying close attention to local events and news, and when that combination hits then the blog suffers. Momentum is a difficult thing to recapture. Fortunately for me, occasionally little local issues just rise up and slap me in the face.

Long-time observers and occasional readers of this blog will remember the simmering passions over the distribution of tax burdens between City of Pittsburgh residents and commuters who live in the suburbs. Suburbanites (suburbanauts?) cruise into the City each day in large numbers, soak up the benefits of a broad range of public services, then retreat beyond the City's boundaries, free of City taxes. It is often argued that much of the financial crisis that afflicts the City could be solved by rebalancing this tax burden (a commuter tax, in other words), and even if that wouldn't save the City, then the rebalancing is in order as a matter of simple fairness.

Let's assume that there is a lot of sense in this suggestion. The future-of-Pittsburgh question is whether the economics are likely to pay off. Is the money going to be there? My strong sense is that over the next decade, some of Pittsburgh's suburbs, and their residents, are going to be doing pretty well, others not so well, and still others - well, to call them "suburbs" might turn into an insult to that term. A commuter tax is going to fall unevenly on the suburbs themselves, and it's difficult to tell whether, as a group, the suburbs are going to fair well enough to provide a strong source of City income.

The North Hills suburbs are likely to be big winners over the next decade, in terms of population, income - and jobs. To the extent that people continue to commute down the I-279 corridor into Pittsburgh, that's good news for commuter tax proponents (and bad news for everyone who has to endure the horror that is McKnight Road). To the extent that the Cranberry and its neighbors continue to attract jobs, including jobs that used to live in or might have been destined for Pittsburgh or Allegheny County, then commuter tax proponents are likely to be disappointed. This, of course, shows one of the weaknesses of the commuter tax concept. If jobs are mobile -- and pace Chris Briem's work that shows that in Pittsburgh's case, many of them have not been -- then a differential tax burden may influence how they move.

South Hills suburbs, by contrast, are creaking, and over the next ten years they likely will continue to do so. Population growth has slowed. Income growth will follow. No one in the South Hills is building employment clusters comparable to what we've seen in recent years up north, though new investment around the Pittsburgh International Airport suggests some reason for optimism - especially if the airport itself somehow manages to build more traffic. PIA as the hub of South Hills community economics is indicated by shifts in South Hills retail: Century III and South Hills Village malls are both struggling; retail in Robinson and North Fayette is expanding.

The doubtful future of the South Hills was brought home to me (again) recently as a little financial scandal erupted in my home township, Mt. Lebanon. I've written before that Mt. Lebanon is the canary in Pittsburgh's financial coal mine. If the suburb that most of Pittsburgh both envies and loves to hate can't get its financial house in order, given its professional planning and city management apparatus and the wise elders who have dominated the town for decades, then the rest of the region has little chance for stability. And Mt. Lebanon's financial house is collapsing all around us, while public officials are scrambling for cover.

Last year the township's School Board voted to proceed with construction of a brand new high school building (tear down most of the old, build up the brand new) at a nominal cost of roughly $110 to $115 million (I say "nominal" because the real cost is likely to be much more). That's a lot of money in anyone's book, and I and others in town argued that the the time wasn't (and isn't) right for such a huge capital investment. Fix what needs to be fixed, we said, and wait until the financial weather clears for the rest. But the Board disagreed, relying in part on the promise that 15% of the project's cost would be reimbursed by the Commonwealth. That wasn't a special deal; reimbursement for school projects is a standing obligation of the Commonwealth.

Last week, local residents were informed that the reimbursement rate would be roughly 8% - meaning that the local share of the project, the amount that has to be financed by local debt and school taxes - has now jumped by a couple orders of magnitude. Couple that with other state-mandated increases in school spending over the next several years, and Mt. Lebanon -- once the showpiece of public education in Western PA -- is looking at tax increases over the next few years on the order of 40% - 50%. (For local blog posts describing this fiasco, take a look here and here.) I refer to this as a little scandal because School District officials publicly relied on the 15% number in selling the project to the taxpayers, successfully sold the project in the public's mind, and now they have backtracked to the 8% number. One school director has tried to explain what looks like a bait-and-switch in terms that make the sale of collateralized debt obligations look simple and sensible. She argues that the high reimbursement rate is fair because it applies to the nominal cost of the project; the new, low reimbursement rate is also fair because it applies to what the district and its taxpayers will actually pay to finance the project. Since the latter figure is what comes out of my pocket, I think that it's fair for me and my fellow critics to be outraged: The town was told that it would have to pay one thing (based on a high reimbursement) and now is being told that it will have to pay much, more more (based on a low reimbursement).

Besides the fact that I still hold out hope that the Post-Gazette will send its crack investigative reporters to Mt. Lebanon (I'm advised that this is unlikely; too many PG staff live here!), and besides the fact that other South Hills suburbs have built or renovated schools of comparable scope at significantly less cost (Baldwin, Upper St. Clair), the real lesson here is a broader one: Pittsburgh's older, southern suburbs are not aging well. The pool of resources is relatively fixed; fights are erupting over their distribution. The center of Pittsburgh's suburban gravity is shifting north, where the resource pool is growing. Among other things, that means that South Hills suburbanites are likely to fight a commuter tax even more intensely than their North Hills neighbors will - because the South Hills pie is shrinking while the North Hills pie is growing.

That leaves points west and east. I see much of suburban Pittsburgh through my South Hills lens, so I have less to offer here. Points west (down the Ohio River - Aliquippa, Beaver, and so forth) and points east (and south) up the Mon River (especially up the Mon River) are not looking healthy today, and there is little reason to expect that they will do more than continue to limp along for the next decade. [Sharp-eyed readers will note that PIA and Robinson are really west of downtown Pittsburgh, not south. I think that lots of Pittsburghers, region-wide, think of PIA and so forth as "south" even while they drive the Parkway West to get there.] Things may get worse. The battle for Braddock is under way right now; we will see what happens there. Will there be anyone in Braddock, ten years from now? The older generation that ties that town to its past will be almost completely gone by then; the newer generation that is trying to reimagine the place (I'll call them "Socio-Industrial Entrepreneurs") will have to fish or cut bait, because their money will either come in or dry up. In truth every town up that way and beyond will become a battleground of one sort or another over the next decade or two, if it hasn't already. Homestead is an exception that partially proves the rule; via the Waterfront development, Homestead effectively resolved its own battle by voluntarily annexing itself, economically speaking, to Squirrel Hill. I wonder whether the region will have the stomach and the energy to fight the same fight over and over again, town by town. Close the hospital? Close the high school? Close the grocery store? It may. It may not. There are a lot of City of Pittsburgh neighborhoods that need that stomach and energy, too.

Points due east, out the Parkway to Monroeville and beyond, look somewhat more promising to me, with a future that is not as comparatively bright as the future of the North Hills, nor as comparatively bleak as the South Hills. I've been watching the progress of Vocollect's proposed expansion in Penn Hills, as a signal of the future of the eastern economy. Gradually, that project is moving forward, but it has been a struggle at every step.

Of course, few people think of down-river and up-river communities when they think of a commuter tax. The coming battles over saving those towns are significant to their residents and to the broader identity of the Pittsburgh region, but in economic terms, they are cost-sinks. The question there is how many resources is Pittsburgh willing to sink into them. The commuter tax question raises the income question, that is, the benefit question: How can the suburbs help Pittsburgh, not how can Pittsburgh help the suburbs? The mental model of a commuter tax is white-collar professionals driving in from Wexford, Upper St. Clair, Churchill, and Murrysville. Those communities and their neighbors are worth watching especially closely.