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Impediments to economic growth

| Sunday, June 26, 2005

How many people think a merger of Pittsburgh and Allegheny County would save money?

The Allegheny Institute answers that question in a new report available at its Web site. The answer is no.

For instance, the new Metro Louisville and the 35-year-old Indianapolis UniGov consolidations didn't promise to reduce the cost of government. And they didn't. Nor was there complete consolidation.

Supporters did promise "bigger" cities. Intuitively, it seemed certain that size and harmonizing economic development goals would attract investment.

Our intuition takes a different path. Cities become big and stay healthy because they have persisting vitality. Rebuilding the lines of government authority is window dressing.

In Louisville, jobs were lost and jobs were gained, but much of the growth came at the cost of government subsidy. The same was true in Indianapolis.

But a truer model is Philadelphia where total consolidation was completed in 1952. Today it remains under state oversight and per capita local government expenditures of $2,198 in 2004 were 60 percent higher than the $1,400 per resident in Allegheny County for municipal and county governments.

Pittsburgh is subject to state oversight because it borrows, collects and spends too much money. Consolidation voodoo is no cure.

There is no hope for Pittsburgh to turn the corner unless the central impediments to economic growth are torn down.

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