How 23 Year-Old John Campbell Can Save Harrisburg

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Nate Berg introduces us to John Campbell, the 23-year-old college student who will try to rescue Harrisburg as the city’s new Treasurer:

Facing these mounting debt issues is the city’s newly installed treasurer, John Campbell, a 23-year-old college student.

Currently pursuing dual bachelor’s degrees in business administration and economics, Campbell will have his hands full collecting the city’s taxes and trying to invest what little money is left to help bring Harrisburg’s coffers back to life. It’ll especially be a challenge in this town, where the local politicians barely communicate with each other and the state has recently installed a receiver to determine how tax dollars are spent, asReuters reports:

Campbell, a former Democratic Party official who earned an associate’s degree at a Harrisburg community college and hopes to complete his bachelor’s degrees by 2013, is trying to use the power of his office, once considered a backwater of city government, to bridge the financial gap.

But with the state receiver in charge of the city’s finances, Campbell’s flexibility is limited.

Though he supported the city’s bankruptcy filing, he opposes the sale of the city’s parking garages, one of Harrisburg’s most dependable revenue sources. He wants to sell the indebted incinerator and the city’s large collection of Wild West and African-American artifacts, leftovers from a previous mayor’s obsession with making Harrisburg a museum mecca.

If I were in Campbell’s shoes, here’s where I’d be looking for savings and revenue.

First, Harrisburg has a land value tax. Its real estate tax raises more revenue from land than buildings. This is one of the most progressive taxes, and unlike real estate taxes on property, raising the rate promotes development and growth.

Harrisburg’s current millage rates are 30.97 for land and 5.16 for buildings. So the first thing I’d do is bring the land millage rate up to 37, and reduce the rate on buildings to 0 for the next 10 years.

This would encourage developers to take advantage of the window and build while it’s cheap. You’d be removing the disincentive to make property improvements but also creating a stronger disincentive for waiting to build on vacant land.

Next thing I’d do is make sure every curb-side parking space in the city is metered, and then switch to a variable rate pricing plan for parking. Instead of a flat rate all day, electronic meters would adjust prices based on demand in real time, with the goal of keeping 1-2 spaces open on every block.

During peak times, people would pay more to park in the busiest areas, and pay less during off-peak times. This would likely raise revenue on net, and there would also be economic gains from improving parking demand and traffic management.

Normally I would be in favor of selling (not leasing!) the city’s parking garages to private owners, but this is an important revenue stream for Harrisburg. However, the city can apply the same market pricing system to garage parking, for a net increase in revenue. I would definitely sell the city-owned surface parking lots to developers.

Campbell has a good idea with the commuter tax. Earned Income Tax revenue from income earned in Harrisburg should stay in Harrisburg, not follow workers back to their home municipalities. Being that Harrisburg is the state Capitol, lots of people commute in to work, and make use of the city’s public services, but live outside the city. More of Harrisburg’s revenue should come from these workers.

Another area Campbell should look to is PILOT (Payments In Lieu of Taxes) from non-profit organizations. With so many advocacy organizations and non-profits located in Harrisburg, the city is losing out on a lot of revenue by providing public services to firms who don’t pay any taxes. They should be trying to get PILOTs from more of these organizations, close to the land tax rate.

Finally, state government can help the city by giving counties the power to levy a 1% sales tax. Harrisburg would get the keep the share from sales in the city.

This entry was posted in Budget, Economy, Harrisburg / South Central.

6 Responses to How 23 Year-Old John Campbell Can Save Harrisburg

  1. Poshi says:

    Nobody's mentioning that this kid ran unopposed… the voters had no other options on the ballot for Treasurer!

    • jongeeting says:

      Sounds like he's not doing a bad job…

    • Edward says:

      He didn’t run unopposed… In the primary he ran against another well known older expierienced democrat who he beat because he ran a better campaign, from there because there are no republican canidates for minor city offices he did not have an opponent in the general. The people of harrisburg still choose him in the primaries.

  2. JoyfulA says:

    He'll have an amazing resume!

    I wish him wonderful results from his efforts.

  3. Rick Rybeck says:

    I agree with the recommendations in this post. If people would like to learn more about how restructuring taxes and fees and help create jobs, affordable housing, transportation efficiency and more sustainable growth, see http://www.justeconomicsllc.com

    Good luck, John Campbell!

  4. Dan Sullivan says:

    Upping the land value tax is an excellent idea. It is the only tax that raises revenue with a positive impact on economic growth. See Fortune Magazine, "Higher Taxes that Promote Development" http://savingcommunities.org/docs/fortune/hightax

    Lowering the building tax for only ten years is not the best carrot for development. Harrisburg can give ten-year abatements on new construction and then phase out the building tax over that same ten-year period. This looses less revenue during the immediate crisis, and actually gives a better (perpetual) benefit to those who build in Harrisburg during this difficult time.

    His variable parking proposal is right out of Donald Shoup's "The High Cost of Free Parking," and will do wonders for the city, even if it generates no parking revenue or even loses revenue. This in turn will increase land values. The more Harrisburg shifts to land value tax, the more intelligent policies like variable parking rates will indirectly capture these values for the city. Another intelligent improvement that would attract development would be to remove parking requirements from zoning and to improve bus service within high-density areas. Most bus systems extend bus service outward rather than make it so good in urban areas that people give up their cars and rent cars when they are needed.

    Selling the parking garages largely depends on whether they were serve an significant public purpose or a mere revenue purpose. Private garages tend to maximize revenue without regard to public impact. Campbell's applying Shoup's variable rates to garages as well as to street parking makes sense, although I am not sure it would raise revenue directly. Parking lots are a terrible land use where land is valuable, so I agree that he should put such lots up for sale, but should try to get good market rates for them rather than panic-sell them.

    What specifically to sell depends on analysis of what the city can get. My sense (from a distance) was that private owners would have more aggressively fought the EPA and avoided the costs. Of course, this is not an *environmental* reason for selling the incinerator, but it suggests that the incinerator would be worth more in private hands, and that selling it makes economic sense.

    I'm not so eager to tax commuters. Evidence from other cities, such as Philadelphia and Cleveland, indicate that businesses are even quicker to locate outside a wage tax based on business location than residents are to locate outside a wage tax based on residency.

    Beyond that, Harrisburg should push for reassessment. Invariably, the richest neighborhoods are under-assessed and the poorest over-assessed. Also, given Harrisburg's recent problems, I am confident that land values have risen in the suburbs relative to the city. Reassessment would lower Harrisburg's share of the county real estate tax burden, and would shift the internal burden onto those more able to pay. Accurate assessment coupled with land value tax would jump-start Harrisburg's economy.