Federal fuel for New American Localism

July 27, 2016 Bruce Katz, Brookings Institution

The declinist strain running through this presidential election overlooks one of the most important dynamics animating our country today: With limited help from federal or state government, cities and metropolitan areas are driving their communities forward in ways that would have seemed impossible just a few decades ago. Across the country, local efforts are harnessing the expertise and capabilities of the public, private, and civic sectors in collaboration; utilizing multidisciplinary approaches to meet unique local priorities; and being financed in innovative, cross-sector ways. I refer to this phenomenon as the emergence of a New American Localism.

While New Localism is necessarily driven from the bottom-up, the next president has the ability to dramatically strengthen the platform upon which local efforts can thrive. This is the subject of my recent piece for the First Year Project, a publication of the Miller Center at the University of Virginia. My essay focuses on three ways that the next president could transform the federal government’s relationship with cities and metropolitan areas to strengthen the localist dynamic fueling our country’s economic growth and social progress. I argue that the federal government should provide cities with more transparency in how it invests, more flexibility in how federal resources are spent, and a more comprehensive set of tools to leverage private and civic capital for transformative projects.    

The first area of federal reform must focus on providing cities with more investment transparency. The federal government is far and away the largest single investor in cities, providing a huge array of intergovernmental grants, tax abatements, and credit enhancements to places around the country. But the full scope of these investments is not publicly available information, preventing cities from better coordinating local action or better leveraging private and civic collaboration. As I detail in the piece, the next president might issue annual metropolitan investment statements, detail the federal contribution to specific policy areas (like the resources devoted to helping disconnected youth), or pilot a public asset inventory in a few test cities around the country, among others.

The second way the next president might strengthen New Localism is by providing cities with more flexibility in how they spend federal resources. Most of the resources that Washington provides to cities are heavily prescriptive and compartmentalized, making it difficult for cities to create coherent strategies to combat their distinct local challenges. This prescriptiveness is well-intentioned, but it often limits the effectiveness of these expenditures. The federal government should give capable cities the flexibility to adapt federal investments in transportation, housing, workforce development, education, and other areas to specific local needs and priorities. As I write in the piece, our next president might consider emulating the “City Deals” and devolution agreement process underway in the United Kingdom, which has created a competitive process for cities to apply for greater discretion over the use of central government resources across a range of policy areas.  

Finally, our next president should augment credit enhancement mechanisms to bolster cities’ ability to leverage public, private, and civic capital to the greatest extent possible. Some of the ideas I introduce include giving small investors access to equity crowdfunding, expanding financing for transit-oriented development, and expanding financing opportunities for large water and wastewater infrastructure projects.

Though the headlines are focused on the circus that is the presidential election, make no mistake—New Localism is here to stay, and cities and metropolitan areas will continue to be our country’s engines of economic growth and drivers of social progress. Our next president has the opportunity to add to this historic momentum by reshaping the federal government’s relationship with local governments. Will they take the opportunity, or abide by the status quo?