Network Report: The Vital Role of States in Accelerating Economically Challenged Cities

The National Resource Network (the Network) has released Accelerating Cities: Why States Are the Most Important Partners for Economically Challenged Cities, which provides recommendations for states to effectively work with cities and includes case studies and data from Virginia and New Jersey – two states with incoming governors and cities that have economic challenges.

In its work across the country, the Network has found that one of the key drivers of success is a strong partnership between states and cities. “It is clear cities cannot overcome their economic challenges alone, and states must play a role,” said David Eichenthal, Executive Director of the Network. “Many state policies, including taxes, pensions, and civil service requirements, in addition to state funding, are critical to local governments. These state policies and investments can often make or break efforts to revitalize cities.”

“State governments can be crucial partners in supporting the turnaround of economically challenged cities,” said Neil Kleiman, Deputy Executive Director of the Network, Professor and Director of Wagner Innovation Labs at New York University. “But too often, states are afterthoughts in these discussions. In states like Virginia and New Jersey and others around the country, there are great opportunities for better partnerships to drive change.”

“Research shows time and again that state decisions matter to cities,” said Michael Pagano, Dean of the College of Urban Planning and Public Affairs at the University of Illinois at Chicago. “But that doesn’t mean that states must dictate policy to cities. The more cities that are allowed to control their destiny, the better they do. That is why partnerships are so important.”

The report includes an analysis of two states – Virginia and New Jersey. Both states recently elected new governors, and are critically important to the overall national economy. They also have their share of economically challenged cities – from former industrial centers to inner ring suburbs to cities that are more at the center of otherwise rural areas. Because they are in a gubernatorial transition, these two states also have an opportunity to implement new ideas and approaches.

Findings from the report include: 

  • Economically challenged cities generate significant economic output. In just a small sample of Virginia’s economically challenged cities, there is over $35.5 billion generated in GDP. In New Jersey, a select number of challenged cities account for $37 billion in economic output, 6.4 percent of the state’s GDP.

  • Economically challenged cities are also home to hundreds of thousands of jobs. New Jersey’s cities offer 530,000 jobs, 13 percent of the state’s overall employment, while Virginia’s cities account for over 185,000 jobs in the Commonwealth.

  • But the per capita income from those jobs differs greatly between challenged and nonchallenged cities. In New Jersey, per capita income for residents in economically challenged cities is 50 percent less than for residents in other cities. In Virginia, per capita income is 20 percent less in economically challenged cities compared to the per capita income for residents in other cities across the state.

The report also provides recommendations for states beyond Virginia and New Jersey, including establishing a State Resource Network to bring together states and cities to partner on issues that are most important to them. The National Resource Network has already piloted a State Resource Network in Massachusetts, and California recently announced it was launching its own State Resource Network. In addition, the National Resource Network launched a competition for up to five states to create their own State Resource Networks. The prize purse is funded by a grant from the Laura and John Arnold Foundation. The grant also provides funding for the National Resource Network’s efforts to help cities develop and implement multi-year financial plans. Applications for the competition are due January 30, 2018.