Baltimore and Philadelphia share a similar economic history, with a downward spiral beginning after World War II and continuing for half a century. But after losing a quarter of its population, Philadelphia turned the corner and began growing in 2000. Baltimore continued to bleed population, losing over 35,000 more residents between 2000 and 2018 while Philadelphia gained 50,000.
Philadelphia’s success is all the more remarkable because it was objectively worse off than Baltimore by almost every metric (see chart at bottom for detailed comparison).
- Philadelphia has significantly higher taxes and a less competitive tax structure compared to its suburbs.
- Both cities had comparable rates of deep poverty and segregation.
- Philadelphia actually had a more serious violent crime problem than Baltimore in the early 2000’s.
- Philadelphia’s government is more bloated and corrupt.
- Philadelphia receives significantly less state support than Baltimore.
- Both cities saw an exodus of large home-town corporate headquarters in the 1980’s and 90’s.
So what’s different? Philadelphia’s Education reform and PA’s Charter School Act
Philadelphia’s Y2K embrace of charter schools was not voluntarily. Its politicians had long used the school bureaucracy as a dumping ground for patronage corruption. The school district was effectively insolvent in 2000, even before the recession hit. Republicans controlled all branches of PA government. They bailed out Philadelphia schools, but demanded accountability & fiscal responsibility. Philadelphia’s central bureaucracy was reduced by over 50%. PA also passed one of the most pro-charter school laws in the US, giving parents in a failing schools real choice.
There are now over 60,000 students in various forms of charters in Philadelphia, 1/3rd of the district. That’s at least 60,000 parents who chose charters. How many of them would have fled the City if they were given no other choice?
On the other hand, Maryland’s charter school law, passed in 2005, is one of the worst in the US. Charters are completely controlled by local school bureaucracies who sees their success as a threat, or an unfair threat to “equity” that must be eliminated. Philadelphia charters operate with real autonomy, answering to state regulators and parents.
Big Difference #2: 10 Year Tax Abatements
Philadelphia created a broad policy of giving anyone and everyone who undertook a substantial renovation a 10 year abatement on the value of improvements.There is no need to lobby your councilperson. The abatement is a right by law.
Abatements were an extremely clever policy that tricked new residents into Philadelphia’s tax trap. The City had a dozen other ways to milk its new residents, including a 4% City income tax, 10% City liquor-by-the-drink tax, a 2% city sales tax surcharge, etc. Few people, especially young people who wanted to buy a home in the City anyway, thoroughly considered the massive tax-increase 10 years in the future.
Tax Abatements Draw in New Residents, But School Choice Retains Them
Baltimore and Philadelphia both faced the same demographics- the baby boomers’ echo, a generation raised predominantly in the suburbs, sought a more urban lifestyle. After the Republican takeover of the US House of Representatives in 1994, a longstanding policy prohibiting the destruction of public housing was repealed, paving the way for the revitalization of vast sections of the City. In Philadelphia, I moved onto 22nd and Fitzwater South Street, seven blocks from a notorious HUD tower that had just been torn down. The vicious cycle of blight, disinvestment and middle-class flight exacerbated by HUD’s public housing reversed itself within a couple of years.Tax abatements supported the redevelopment of neighborhoods that had seen little investment in decades. Several hundred million dollars of home equity was created for the predominantly African American property owners.
Charters vs. Public Schools Aren’t a Zero Sum Game
Charter schools are often criticized as undermining public schools. In my former neighborhood, the opposite was true. New residents brought racial and socio-economic diversity to a school that had been predominantly poor and 100% African American. These new residents preferred to send their kids to the neighborhood public school. School choice reduced the risk of this decision. Parents know if they faced a problem, they had many options other than moving to the suburbs. Parents knew that they would not be limited to the troubled, dangerous middle school they were districted into. The local public school’s principal and teachers made real effort to reach out to parents and assure them that their kids would be safe and well educated. Bureaucrats at the school district were deterred from imposing foolish or faddish policies throughout the district. When parents have the power to say “No” to failure, they will very often say, “Yes” to public schools.
Here in Baltimore, parental choice is extremely limited. Parents who may be willing to take a risk on a neighborhood elementary school understand they are most likely only deferring a move to the suburbs when it’s time for middle-school. The sad fact is even where principals and teachers are working miracles turning around struggling schools, North Avenue’s reputation drives away many parents who can afford to leave.
Charters and parental choice aren’t a silver bullet. But what Baltimore is doing clearly doesn’t work. The highly centralized, bureaucratized model of school management has failed. A broad swathe of City neighborhoods are served by schools that are total failures, where not a single kid out of thousands achieves basic proficiency. This is a real injustice, and we need to begin addressing it with systemic reform that transfers power from Ed bureaucrats & social engineers to parents.
|Taxes||City sales tax||None||2%|
|City income tax||.37% residents
|Business income (2)||None||6.35% net income|
|Property tax (3)||+1.25% (2.35% vs 1.1%)||~.3% less than suburbs|
|Misc. City Nuisance Taxes
|Licensing bureaucracy||Licensing bureaucracy
$.015/ ounce beverages (incl. diet)
$2/ pack cigarettes
10% liquor-by-the drink
~50% premium on nat. gas (due to mismanaged city utility)
|298,554 residents (-31.4%)||553,450 residents (-26.7%)|
|Median home value/
% owner occupied (6)
|State Support||State political environment||Supportive:
D super-majority (50 yrs)
D Gov (42/50 years)
R State Senate since 1994
R Gen. Assembly 30/36 years
|School funding per pupil||$16,731
|% state funded||
|Schools||Number of Students||80,592||204,460|
|State law ranking
(Center for Education Reform)
F: 44 out of 45 states
|Act 22 Passed 1997
C: 18 out of 45 states
- Difference with suburbs for Baltimore is with Baltimore County. PA taxes at township level. For Philadelphia, comparison is with Lower Merion Township on border of city.