This post is part of a larger series.

Within the Greater Philadelphia Region of 11 counties, there are almost 400 local governments and dozens of school districts. Fragmentation of local governments is one core reason why there is so much poverty and inequality in Philadelphia. First, it means that government taxation and services are inconsistent and inefficient. Second, and more importantly, it means that people who can afford to can easily move just outside the jurisdiction of Philadelphia to a locality with lower or no taxes, while still working in the City and gaining the benefits of its economy. Effectively, this creates local tax havens, which means there is less revenue for the City government and fewer services for those in need.

In a book from 2008 titled Restructuring the Philadelphia Region, the authors go into great detail about the fragmentation of local governments as a core issue in the region. According to them, prominent theorists in the 1950s pushed for a “value proposition,” which enshrines free market ideology in a theory of local governments. They argued that households select where to live much like a consumer selects which product to purchase. They weigh the costs and benefits, such as local tax rates, housing quality, local schools, proximity to jobs and transportation, and so on, and they move to wherever they perceive the best value to be. Therefore, the more local governments there are, the better. This way, people have the maximum number of choices, and competition for residents will be maximized.

Unfortunately, this is not quite how things have worked out. For one, the same authors found that people tend to only view housing costs as the primary driver of a move. But, more importantly, this kind of thinking has led to immense fragmentation of local governments. The Greater Philadelphia Region (according to these authors) has 353 local governments that fall between two states. The State of Pennsylvania also encourages competition among localities by placing responsibility on local governments to raise revenue and provide services. Finally, local governments weren’t even allowed to coordinate development policy before 2000, which led to a host of varying policies and regulations for construction and development across local government borders. However, an advocacy group successfully lobbied to have this law repealed after 2000.

This fragmentation has also caused problems with enacting federal policy. For instance, the Department of Housing and Urban Development requires each county and municipality to produce a housing plan in order to receive funding. The result has been “13 consolidated plans, six public housing authority plans, five county comprehensive plans, and up to 238 municipal comprehensive plans.” This means there is no comprehensive housing plan or other development plan.

I think the authors hit the nail on the head when they sum up their core thesis: “The differences in the fortunes, and therefore in the interests, of different groups in the region are increasingly reflected as differences between communities, with the wealthy, the well housed, and the well educated separating themselves from less advantaged citizens. The story of the last half-century is a story of the sorting of social and racial groups across a regional landscape of 353 local governments. We have argued that this fragmenting of public authority into hundreds of small units has exacerbated inequalities in access to jobs, housing, and education.” I agree that the fragmentation of governments has not only exacerbated inequality, but provided a method for the wealthier among us to self-sort into effective tax havens. This is part of what allows there to be such wealthy households just outside of Philadelphia, but who work within the City (I covered this in a much earlier post).

I advocate that we take this regional definition even further. We should use the Office of Budget Management’s definition of a greater city area, or the Metropolitan Statistical Area (MSA). For Philadelphia, this is the Delaware Valley. These areas are defined by having a core city of at least 50,000 people surrounded by areas that have economic interdependence. They can be shown to be tied together by looking at their commuter data.

Philadelphia’s MSA encompasses 11 counties across four states, and it includes 377 local governments.

Montgomery (62 localities, 818,677 people)
Bucks (54 localities, 626,486 people)
Delaware (49 localities, 563,384 people)
Chester (73 localities, 514,652 people)
Philadelphia (1 locality, 1,569,657 people)
Total (239 localities, 4,092,856 people)

New Jersey
Camden (37 localities, 510,996 people)
Burlington (40 localities, 449,192 people)
Gloucester (24 localities, 291,372 people)
Salem (15 localities, 63,776 people)
Total (116 localities, 1,315,336 people)

New Castle (13 localities, 555,036 people)

Cecil (9 localities, 102,416 people)

Grand total (377 localities, 6,065,644 people)

Just take a look at this map I made of Philadelphia’s MSA. The division of localities is painfully clear.

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This next map shows all of the school districts overlaid with the counties within the MSA.

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In combination with commuter and income data that I used earlier, we can see how residents in the regions immediately surrounding Philadelphia are far wealthier than residents within the City, and they earn their income in the City. In sum, Philadelphia is a region of wealthy commuters. In this way, people are able to gain the economic benefits of living in the Philadelphia region, but while not paying much in taxes to the Philadelphia government and not feeling the negative consequences of an underfunded government. They can return home to the suburbs, where they have their own school districts and public services that are entirely separate. This is a form of self-segregation that benefits the wealthiest among us and harms the most vulnerable among us.

There is no easy solution, and I will not get into details on possible alternatives until the third section. So far, the City captures only some of this evaded tax revenue through the wage tax. This has been the only politically feasible option. However, it doesn’t change the fact that we are all segregated into smaller subregions with completely separate services, and it doesn’t pool any resources outside of wage taxes.