Franklin County could end extreme poverty tomorrow

By Rob Moore

Last week, Franklin County held the fourth of five meetings in its strategic planning initiative to address poverty in the county.

Up to this point, the planning process has been focused on gathering opinions of local leaders on four issues organizers of the meeting have suggested impact poverty: health, employment, housing and youth.

Following these meetings over the past few months, though, has got me thinking. What would it look like if the county tried to address poverty with a laser focus, working to find the most effective ways to reduce the number of people under certain income thresholds?

Let’s start at the very bottom of the income scale: extreme poverty. Believe it or not, there are still Ohioans who live on less than $2 a day, the global threshold for extreme poverty.

In 2016, the Center for Community Solutions in Cleveland, using American Community Survey data, estimated that about 190,000 Ohioans lived on less than $2 a day.

Assuming the rate of extreme poverty in Franklin County mirrors the ratio of deep poverty statewide, we can estimate that about 24,000 Franklin County residents are living on less than $2 a day, or 1.9 percent of the county population.

So how do we end extreme poverty? The simplest answer is to give people money.

Conversations about “basic income” have been raging in the policy community for a few years now. This is not a new idea: The U.S. House of Representatives passed a Nixon-backed basic income proposal as early as 1970. Currently, basic income pilots are being held in Oakland and Stockton, California, and city leaders have started a study committee for a pilot in Chicago.

What would a basic income program look like in Franklin County? Funding a program to push 24,000 Franklin County residents above the extreme poverty threshold would cost about $17 million at a 100 percent uptake rate. Assuming the uptake rate is 60 percent (on the high end for social services), the total cost of the program comes to about $10 million.

Franklin County’s main form of revenue is sales taxes. In 2016, Franklin County’s 1.25 percent sales tax rate raked in about $300 million. This means the sales tax would have to be raised by about 0.05 percent to comfortably fund such a program.

This means if you spent $100 shopping at Easton, you would be charged about 5 cents to fund a program that would end extreme poverty in Franklin County.

There are reasons to worry about this approach. Sales taxes are regressive, meaning they impact the budgets of low-income people more than high-income people. This means that people in poverty who are not in extreme poverty would bear a disproportionate portion of this tax, making it less equitable than an income tax, which the county cannot legally levy.

But it is exciting to see that a small sales tax increase would effectively end extreme poverty in Ohio’s largest county.

This column originally appeared in Columbus Alive.

Better Analysis Means Better Public Policy

In 1987, the Reagan administration signed onto one of the most important international environmental treaties of all time, the Montreal Protocol. This was an agreement for all of the countries of the world to phase out the use of substances that are responsible for ozone depletion.

Twenty-five years later, the Obama administration rejected a new proposed regulation to control ozone at the same time that it supported a regulation to control mercury.

For those readers who are savvy political analysts, you might be scratching your head. Why would the conservative Reagan administration bullishly take on new environmental regulation while the liberal Obama administration rejected it?

While a lot of factors came together to influence these decisions, there is one that had an especially large impact on both of them: administrative use of cost-benefit analysis.

Cost-benefit analysis is the gold standard for applied welfare economics. What does this mean? It means that the best way for us to forecast the economic impacts of a given policy is cost-benefit analysis.

The federal government has been using cost-benefit analysis for over a century now, starting with the Army Corps of Engineers using it to help design infrastructure projects during the Great Depression. A Democratically-controlled Congress first endorsed cost-benefit analysis in its 1969 National Environmental Policy Act and Ronald Reagan first instituted centralized executive cost-benefit analysis in 1969. This original executive order has persisted, with minor changes, through the H.W. Bush, Clinton, W. Bush, Obama, and Trump administrations.

Cost-benefit analysis is carried out by systematically identifying the economic costs and benefits of regulatory or tax and budget policy proposals then estimating these costs and benefits in dollar terms. Costs and benefits are then discounted to account for the opportunity costs of the dollars used and “sensitivity analysis” is performed to show how accurate the estimates are.

Policymakers find cost-benefit analysis to be valuable because it allows them to measure very different policies, ranging from tax to education to health, against each other quantitatively, giving them an idea of the magnitude of economic impacts these policies will have and who they will impact. Cost-benefit analysis is also helpful because the process unearths an important insight—what will actually happen when a policy is implemented.

Despite cost-benefit analysis’s popularity and long history at the federal level, states and local governments have been slower to adopt this valuable tool. A 2013 study by the Pew Charitable Trusts estimated that the average state only conducts two cost-benefit analyses per year. Ohio was on the higher side, conducting about four on average.

Use of cost-benefit analysis is on the rise, though. Leading the way are states like Washington, which has created a center at Evergreen State College, the Washington State Institute for Public Policy, to systematically analyze and catalogue cost-benefit studies for the state legislature.

Ohio has dipped its toes in cost-benefit territory legislatively and administratively. The Ohio Legislative Service Commission is a well-funded analytical agency supporting the Ohio General Assembly. The Legislative Service Commission does not conduct full cost-benefit analyses, but it does project direct and indirect accounting costs for the state for bills before the legislature.

The Ohio Common Sense Initiative is an embryonic form of the original Reagan Administration executive order centralizing executive cost-benefit analysis. The Common Sense Initiative does not conduct full cost-benefit analyses, but it does mandate “business impact analyses” aimed at estimated the impact of regulations on firms in the state.

As a social enterprise, Scioto Analysis works with policymakers directly to give them the analysis they need but is also committed to improving the quality of analysis in state and local government as a whole. In order to serve this second goal, Scioto Analysis will be releasing a series of studies and resources over the next several months around cost-benefit analysis, its prevalence, and its application, specifically in the state of Ohio.

Better analysis means better public policy. I, for one, am looking forward to seeing how much more effective, efficient, and equitable state and local government will make its policies as they continue to increase their use of cost-benefit analysis. Who knows: it might even be a place for a meeting of minds in our increasingly polarized political landscape.

Rob Moore is the principal for Scioto Analysis, a public policy analysis firm based in Columbus, Ohio.

Columbus housing supply not keeping pace with population growth

By Rob Moore

Columbus has enjoyed relatively cheap housing compared to other large metropolitan areas in the country.

American Community Survey data tells us that the average apartment in Columbus costs $916, which means housing is cheaper in Columbus than all but 13 of the top 50 metropolitan areas in the US.

But incomes are lower in Columbus than other major cities, aren’t they? So wouldn’t housing be more costly when factoring in incomes?

Actually, when factoring in income, Columbus fares even better compared with other metro areas: Only six of the top 50 metro areas have cost burden rates (percentage of renters paying more than 30 percent of their income on rent) below Columbus.

That being said, there are still a lot of Columbus residents who are spending more than 30 percent of their income on rent: 44 percent, according to American Community Survey data.

At the same time, the supply of housing is not keeping pace with growing population. Since 2005, Franklin County has gained more than 200,000 residents, a 21 percent increase over that period. At the same time, the number of housing units has only increased by 40,000, an 8 percent increase.

This means the population has grown two-and-a-half-times faster than the housing supply since 2005.

In order for the growth of housing in Franklin County to keep up with the growth in population, an additional 5,400 housing units would need to be built every year.

These are large numbers. The largest affordable housing developer in the country only started construction on 1,700 units nationwide last year. Developer mandates on affordable housing can make some difference on the margins, but they are not going to make up for the magnitude of this shortfall on their own.

Brookings Institution Analyst Jenny Schuetz has done fantastic work on housing markets that gives some guidance to local governments trying to ease housing supply worries.

Central cities gain much more housing from “reconfiguration,” such as modification of larger houses into apartments, or construction of accessory apartments in places like garages. Easing zoning restrictions that stand in the way of these reconfigurations could lead to more housing construction.

Zoning in general has been a culprit holding back the supply of housing units in many local markets. Many cities are still leaning on a mid-20th century vision of single-family houses when the market calls for more density, particularly near employment centers and transportation corridors.

The Minneapolis City Council made waves last month when it passed a comprehensive city planning ordinance that allowed three-family homes in residential neighborhoods, abolished parking minimums and allowed for high-density buildings along transit corridors.

While many urban attempts at housing reform have only tried to patch the problem (public housing) or force the rent price toothpaste back in the tube (rent control), Minneapolis’ approach takes the housing supply problem head on.

Minneapolis is a similarly rent-burdened city to Columbus (10th most affordable out of the top 50 metro areas). Columbus also has a fairly pro-development history. Maybe it’s time for Columbus to take a page out of Minneapolis’ book.

Rob Moore is the principal for Scioto Analysis, a Columbus-based policy analysis firm.

This column first appeared in Columbus Alive.

Don't Call It Economic Development

By Rob Moore

Earlier this month, City Council and the Franklin County Commissioners voted on separate proposals to commit $50 million each — a total of $100 million — to develop the property for a new proposed Downtown Crew stadium over the next 30 years.

This was a big win for the Crew. After a tumultuous year that almost ended in the charter Major League Soccer team moving to Austin, Texas, it appears that a deal has been struck to keep the team in Columbus conditional on a new Arena District development that includes a new stadium.

While saving the Crew is a big symbolic win for the city, some local officials have also praised the new stadium as an economic development tool. Unfortunately, this flies in the face of the evidence available about the impact of stadium subsidies on local economies.

A highly respected poll of economists conducted last year found 24 major economists agreeing that stadium subsidies will cost taxpayers more than the economic benefits they generate. Only one economist dissented. This isn’t quite “existence of climate change” level consensus, but it’s pretty close.

But don’t stadiums create jobs? Well yes, of course they do, but these jobs come from somewhere. Dollars consumers spend at a stadium are dollars they don’t spend at local movie theaters, bars and concert venues. All the empirical data available tells us that consumers don’t increase spending on entertainment when a new stadium is built, but rather shift their entertainment spending from other sources.

Now, economic development isn’t the only reason the city and county may want to spend public dollars on a stadium development. Maybe the $100 million is worth the symbolism of having an MLS sports team. Or maybe the $100 million is worth the 180 affordable housing units planned to be built on the development.

To put it in perspective, though, what else could the city and county spend that $100 million on over the next 30 years?

With $100 million, the city and county could give 100 unemployed people $15-an-hour jobs for 30 years.

With $100 million, the city and county could put over 600 low-income children in pre-k for free every year for 30 years.

With $100 million, the city and county could lift more than 1,000 families above the poverty line with cash transfers for 30 years.

With $100 million, the city and county could pull more than 2,500 minimum-wage workers paying market rate rent over the housing burden threshold (30 percent of their income spent on housing) with housing subsidies for 30 years.

With $100 million, the city and county could pull more than 4,700 Central Ohioans out of food insecurity every year by providing SNAP-ed nutrition programs for 30 years.

Some of these strategies would have economic development benefits. Others would achieve equity goals. The question we should be asking ourselves, though, is this: Does the symbolism of a new stadium Downtown outweigh the benefits of these other uses of public dollars?

This column originally appeared in Columbus Alive.

Rob Moore Discusses New Research on "Prognosis Ohio"

Scioto Analysis Principal Rob Moore recently appeared on Ohio health policy podcast “Prognosis Ohio” to discuss Scioto Analysis research on Ohio’s economy.

In the half-hour program, Dr. Dan Skinner, a health policy professor at Ohio University and host of the podcast, and Moore discussed the findings of Ohio’s Economy: 2009-2016, a report released by Scioto Analysis last month.

“The broadest…conclusion that comes out of this report is that income inequality is a drag on economic growth,” Moore said on the podcast, “that has direct implications for our public policy.”

Moore and Skinner also discussed the impact of state budget policy on public health.

“Money in people’s pockets and reduction of inequality and poverty also have health impacts,” Moore said, “if you can improve people’s health they will have better incomes, if you can improve people’s financial situations, they will have better health outcomes as well.

Prognosis Ohio is an Ohio health policy and politics report hosted by Dan Skinner.

Moore Appears on "Discussing Politics While Drinking"

Scioto Analysis Principal Rob Moore recently appeared on new Columbus podcast “Discussing Politics While Drinking.” The podcast is a political/comedic show hosted by Columbus entertainer Brylan May.

While on the show, Moore and May discussed the midterm election results, the state of evidence-based policymaking in Ohio, and political polarization.

“On average there are only about four cost-benefit analyses that happen in the state of Ohio every year,” Moore said on the show. “Meanwhile, we’re passing dozens of laws, hundreds of regulations at the state level, and we have 934 cities and villages that are passing tons and tons of ordinances.”

“Discussing Politics While Drinking” will have a rotating cast of guests discussing national and local political issues as well as a range of beers, wines, and spirit offerings on-set.

Weathering the next recession

By Rob Moore

The past decade has been pretty good for Central Ohio.

In 2018, the Columbus metropolitan area experienced its ninth consecutive year of economic growth. Over this time period, Columbus’ economy grew 3.1 percent per year on average, outpacing both the country and Ohio, which each grew at about 2 percent per year over that time period.

That being said, all good things eventually end. A recent poll by the National Association of Business Economics found that two-thirds of business economists in the U.S. expect a recession in the next two years.

Is Columbus ready for a recession?

This month, Columbus City Council is holding hearings on the 2019 proposed city operating budget. About two-thirds of the proposed budget goes to police and fire services, with the remainder going to parks, trash collection, health and human services, economic development and city administration.

When a recession hits, tax revenues go down and cities are forced to either raise tax rates or cut services.

Neither of these are good choices. Raising taxes further strains the wallets of workers who are already dealing with economic hardship. Cutting safety and human services can be unwise since homicide rates increase during recessions and temporary cuts to health and education programs have been shown to have long-term impacts on low-income families.

During the last recession, Columbus faced a shortfall of more than $100 million. In order to deal with this, the city passed a tax increase and avoided decreasing services.

In order to avoid this tradeoff during the next recession, the city has wisely grown its budget stabilization fund (popularly called the “rainy day fund”) over the past few years.

Currently, the budget stabilization fund stands at $76 million, or 8.6 percent of the general fund budget. It is supposed to climb to $81 million by 2020.

While this fund will fill some of the gap during the next recession, it may not make up the entire shortfall in city revenue.

Estimates for Ohio statewide revenue shortfalls say that a safe statewide budget stabilization fund should be somewhere in the mid-teens as a percentage of general revenues. At the city level, this would require tens of millions of dollars more than the fund has now.

On the one hand, you might say that Columbus’ fund can be smaller than the state as a whole because of the relatively stronger Central Ohio economy.

On the other hand, the city budget is 75 percent dependent on income tax revenues, which are more volatile than sales tax revenues. This means that city revenues may fall faster than the rest of the state, which has more of a sales tax base.

Given these factors, the city should consider increasing its investment in its rainy day fund. While it may be tempting to spend all available funds right now, going to the voters for a tax increase in the middle of the next recession, or cutting police services, health services and education services when they are needed most is a dilemma we don’t want to have to face in the future.

This column originally appeared in Columbus Alive.

Should you pay taxes on your bus pass?

By Rob Moore

Earlier this month, I took part in the Columbus Transportation Innovation Challenge, a weekend-long “hackathon” focused on tomorrow’s transportation hurdles in Central Ohio.

The challenge unearthed an exciting new proposal. The weekend’s winning team proposed that Columbus replicate Seattle’s Commuter Benefits Ordinance, set to take effect January 2020.

Seattle’s ordinance requires employers to allow their employees to write off the taxes for all qualified transportation expenses besides parking. The goal of Seattle’s ordinance is to provide a benefit for lower-income workers and to encourage the use of public transportation.

According to Seattle’s ordinance, a middle-income worker using public transportation would save over $350 a year in federal taxes due to the benefit. A minimum wage earner would save over $230. This alleviates financial strain for lower- and middle-class workers using alternative transportation, but it also gets more cars off the streets, alleviating congestion and reducing commute times for those who do drive.

I’ll admit: I was skeptical at first. Our country’s experience with employer-provided health care makes me wary of trying to solve problems of equity through the medium of the corporation. That being said, commuter benefits work a bit differently than health care.

Commuter benefits allow employees to elect to use pre-tax income to pay for alternative commuting expenses. This is actually enabled by federal tax code, which allows employers to provide these benefits to their employees.

Because commuter benefits are a federal tax expenditure, the cost of the benefit is directly borne by the federal government, not by local government or the businesses themselves. Because of this, business groups have actually supported these requirements in other cities, with the Berkeley, California, Chamber of Commerce calling its local ordinance “a rare opportunity to reduce taxes for both businesses and employees.”

In this way, a commuter benefits ordinance is an economic development tool for the city, lowering the cost of commuting and reducing frictions within the local labor market that keep employees from getting to places of employment. In a tight labor market, employers should be excited about this opportunity.

So if commuter benefits are so great for employers, the natural question is this: Why do we need to compel businesses to provide them in the first place?

In Seattle, a 2016 survey of businesses found that the major barrier to providing the benefit was an administrative burden. While that burden should not be written off right away, the additional income generated by the tax write-off should make up for the burden if there is a minimum utilization of the benefit.

Seattle also included $200,000 in its 2018 budget for education and outreach to businesses around commuter benefits and exempted very small businesses from the mandate.

Mandated commuter benefits are one tool the city has to reduce inequality, grow the economy and build a more sustainable local transportation system. While there will be some kinks to work out, the city should certainly take this proposal seriously.

This story first appeared in Columbus Alive.

Team Proposes Mobile App Transit Subsidy

(Columbus, Ohio) - This weekend, a team of professionals and community members that included Scioto Analysis’s Rob Moore proposed the country’s first low-income subsidy delivered via mobile app.

The subsidy would be provided to low-income transit riders in high-poverty zip codes and would be administered by Franklin County. It would be credited to families through the soon-to-be-released SMART Columbus multimodal transit planning app, a smartphone application that will allow commuters to pay for a variety of different transportation modes through one payment system.

“COTA’s change to a ridership-focused model has been a success in increasing ridership, but has left gaps in coverage,” Moore said. “A subsidy paid through a transit planning app could help people in these coverage deserts reach transit corridors.”

The team proposed a 2019 pilot followed by scale-up and full implementation phases in the coming years.

The proposal was a part of the Transportation Innovation Challenge, organized by The Purple Aisle, a national civic leadership accelerator. See further coverage of the event and other new ideas on ABC 6.

Report Suggests Ohio Economic Recovery Dampened by Rising Inequality

Columbus, OH (November 15, 2018) – This morning, Gross National Happiness USA and Scioto Analysis released a comprehensive report of Ohio’s recovery from the Great Recession.

The report finds that Ohio has rebounded well from the Great Recession, but that its recovery has been hampered by growing inequality.

“The average Ohio family spent over $3,000 a year more in 2016 than in 2009 in real terms, which indicates that family incomes have been growing on average,” said Rob Moore, author of the study, “at the same time, inequality using traditional measures has grown by 3% over this period. Inequality has been shown to be a drag on economic growth by harming social cohesion, increasing crime, and dampening investment.”

The report, using the genuine progress indicator (GPI) framework, factors in broader economic impacts than traditional economic measures such as gross domestic product (GDP).

“By factoring in the impacts of indicators such as underemployment, family breakdown, higher education, and environmental degradation, this approach gives a more complete picture of Ohio’s recovery from the Great Recession,” Moore said, “adopting alternative measures like GPI can help policymakers have a better idea of the true state of the economy.”

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Gross National Happiness USA is a 501c(3) Tax-Exempt non-profit organization with a mission to increase personal happiness and our collective wellbeing by changing how we measure progress and success.

Scioto Analysis is a policy analysis firm that provides policymakers and policy influencers with evidence-based analysis of pressing public problems.