Winning and Losing in Pittsburgh

Enjoy today's Super Bowl parade, Pittsburgheans. Tomorrow, you have
to sweep up and get back to dealing with another mess: rescuing your
city's public finances.

As our economy is less and less about big manufacturing plants and
more and more about nimble knowledge workers, it's easier for
corporations of all sizes to move locations. Some move down the
street and others across the country. But when the moves cross
municipal or even state lines, and when they involve thousands of jobs
and millions in tax dollars, you best believe public officials pay
attention.

In a sense, attractive corporations are like attractive free agents:
if they think they can get a sweeter deal somewhere else, they play
the market. Some athletes offer their current employer a "hometown
discount," that is if the team they're currently on is in the ballpark
of the best offers, they'll stay put. And so it is with corporations:
since there's a cost to relocating, corporations won't move unless the
grass is really greener on the other side.

So cities and states cull together sweetheart packages. They offer
tax breaks, give away land, and promise to build stuff near the
location they're offering the employer. Sometimes the conversation is
about staying put and not being pried away by another place, and
sometimes you're doing the prying.

Pittsburgh did a lot of deal-making in the last quarter-century.
Faced with the loss of manufacturing activity after World War II, they
did what they had to, and as a result they have a lot of corporate
headquarters and two new stadiums in their downtown area.

But all this deal-making comes at a price. Seventeen years ago, in an
article for the National Journal entitled "Games Cities Play," Robert
Guskind wrote: "Critics argue that the cities, in their quest for jobs
and development at any price, are making Faustian bargains: luring
corporations and building downtown projects at the cost of starving
city treasuries of revenues for schools, infrastructure, neighborhood
improvement and other needs."

How prescient. For Pittsburgh is on the brink of bankruptcy. Its
population has dwindled to the point that it is smaller than some
Phoenix suburbs. According to an investigation done by the local
paper in Pittsburgh, the city's debt would take fifteen years of
property tax collections to pay off. It's had to slash its budget for
parks and senior centers by almost two-thirds.

But hey, it's got the Super Bowl champions. One better hope that a
lot of T-shirts and hats are sold this week, or that the euphoria of
winning it all carries over to a hopeful and determined plan to turn
the city's finances around.