Uploaded by Ben Morehead, Associate Publisher of Policy Review magazine and authorized agent for the copyright owner(s). CITY LIGHTS America's Boldest Mayors by William D. Eggers From the Summer 1993 issue of Policy Review To subscribe to Policy Review, call (800) 544-4843 There's not much good news coming out of America's big cities these days. The streets resemble war zones. Racial tensions are worsening, bridges and sewer pipes are crumbling, basic services are deteriorating -- and city spending and taxes keep rising. "Many cities, once mighty financial and manufacturing centers, are becoming hollow cores of poverty and crime," says Stephen Moore, an economist with the Joint Economic Committee of Congress. For decades, millions of city dwellers have responded to these conditions by moving to safer, cleaner, and lower-taxed suburbs. In 15 of the nation's 25 largest cities, population has fallen by 4 million since 1965 -- while the U.S. population has increased by 60 million. A little under one-quarter of Americans now live in central cities, down from 37 percent in 1960. Businesses have followed the middle-class stampede away from central cities, transforming former bedroom communities into "edge cities," huge commercial and retail centers where glimmering office buildings and fancy hotels stand beside middle-class subdivisions. Two-thirds of America's job growth between 1960 and 1980 occurred in the suburbs. Even as the population has declined in many of America's big cities, city budgets have mushroomed. Per-capita city-government spending has more than doubled in real terms in the last 32 years. According to a study by the Washington-based Cato Institute, city governments grew most rapidly in the cities where the population fell the most. Caught in a vicious cycle of ever-increasing taxes and ever-diminishing tax bases, population nose-dived by 37 percent between 1960 and 1990 in the highest-spending cities. In the worst shape are the once-vigorous industrial centers of the Midwest and Northeast. Since 1950, the population in St. Louis has tumbled by over 50 percent, while in Detroit and Cleveland it has dropped by more than 40 percent. For years, big-city mayors have blamed the ills of cities on the federal government's purported "shameless neglect" during the 1980s. The mayors tell the media and their constituents that Ronald Reagan and his cuts to local government are responsible for the doomed cities, but they should know better. Since 1965, Washington has spent approximately $2.5 trillion on aid to cities and on inner-city residents in the War on Poverty. Despite the equivalent of 25 Marshall Plans, the conditions of cities have deteriorated. Yet at a time when the plight of cities seems nearly hopeless, three new-style, big-city mayors have emerged who believe most of the answers to city problems begin at home, not in Washington. These mayors -- Philadelphia's Edward Rendell, Indianapolis's Stephen Goldsmith, and Milwaukee's John Norquist - - desperately are trying to reverse the flow of families and businesses from their cities. Their ideas merit the attention of mayors across America. The Philadelphia Fighter For most of its history, Philadelphia was an attractive city to live and work in. Thanks to inexpensive row houses, the City of Brotherly Love was the nation's leader in working-class home ownership. Crime was low in tightly knit ethnic and middle-class black neighborhoods. Central High School and Girls High School were among the best big-city public schools in America. Over the past 30 years, however, Philadelphia has been a prime example of city mismanagement and urban decay. In 1984, the police department burned down two blocks when trying to evict the radical MOVE cult. Sidewalks were so filthy a few years back that the Philadelphia Daily News published a regular column under the pseudonym, the "Marquis of Debris." During the past 20 years, a fifth of the city's population has fled as crime has skyrocketed, schools have degenerated, and city finances have hurtled out of control. City Hall in Philadelphia long had been famous for corruption and patronage. "The history of the city of Philadelphia is a history of bad government," says Fred Voight, who directs a government watchdog group called the Committee of Seventy. "In the 300-odd years of the city's history, we've had about eight years of good government." Despite this, for most of that time City Hall lived within its means and did not pose an undue burden on Philadelphia residents and businesses. Not so in the 1970s, 1980s, and 1990s, as never-ending budget shortfalls have been resolved by raising taxes and relying on state and federal aid. After a decade of teetering on the edge of fiscal catastrophe, Philadelphia hit rock bottom in 1991. The City Council turned down a proposed 20th tax increase. The bond rating fell below junk status. Pension and vendor payments were suspended and city workers were unsure of receiving their next paycheck. City & State magazine rated the City of Brotherly Love last among the 50 largest cities in terms of fiscal health and called it "the city that has set the standard for fiscal distress." Then came the election of Edward Rendell in 1991. A Democrat and native New Yorker, Mr. Rendell, Philadelphia's former district attorney, ran a campaign to the right of his Republican opponent and handily won the mayoral race on a platform that promised pain and cuts in government. This was quite a change for a man who, for most of his political life, was a classic liberal Democrat. "Ten years ago, tax-and-spend liberal would have been a fair label," admits David Cohen, the mayor's chief of staff and alter ego. "The Rendell of the 1990s, however, is not a Ted Kennedy Democrat. He recognizes that government can't be all things to all people all the time." Inheriting a Fiscal Disaster By the time the new mayor took office in January 1992, the city had a $208-million budget shortfall -- projected to rise to $1.4 billion in five years. "Rendell inherited a fiscal disaster of a magnitude not seen in the city since 1931," maintains the Committee of Seventy's Fred Voight. Previous mayors faced deficits by raising taxes, 19 times during the 1980s alone. By 1991, the city's tax burden on the average family was the highest among all east-coast cities and twice as high as in Philadelphia suburbs. Businesses also were socked with high taxes: the typical mom-and-pop store paid twice the taxes of its suburban counterpart. Mr. Rendell realized that this pattern of tax increases had to end before Philadelphia's remaining taxpayers followed what had become an annual migration to the suburbs. So he took tax increases off the table. He pointed out that despite nearly two tax increases a year in the 1980s, tax revenues, in terms of purchasing power, did not grow. Why? With each tax increase, more and more taxpayers fled the city; 20 percent of the population was lost in the past 20 years. Only the poor were staying. A 1987 study by the Wharton School at the University of Pennsylvania estimated that up to 130,000 Philadelphia jobs were lost just due to the differential in wage taxes in the city and surrounding communities. "If people could have sold their homes, three years ago there would have been a mass exodus from the city," says life-long resident Jack Adler. Also rejected for closing the budget gap were across-the-board spending cuts, viewed merely as a quick fix that would do nothing to solve the structural problems of Philadelphia's government. This left only one choice available -- to cut the actual costs of government. Standing Up to the Unions Philadelphia's per-capita operating budget rose by 30 percent in the 1980s, after adjusting for inflation, according to the American Legislative Exchange Council. The major culprit was the rapid expansion of public employee wages and benefits, which account for over half of the city budget. A 1991 report by the Pennsylvania Economy League found that city clerks and typists were paid 50 to 70 percent more than their private-sector counterparts in the area. City security guards were paid over 80 percent more than private ones. The basic public-employee benefits package made even the Scandinavian-model welfare states look Scrooge-like in comparison. Entry-level workers in Philadelphia received 52 days off each year. Leave time alone cost the city $75 million on regular and holiday overtime pay in 1991. In almost every area -- holidays, pay, and health care -- the city's benefits packages were higher than all other American cities. City work rules added other costs: firing employees had become virtually impossible; employees could not be required to work overtime or do any work under their job-level classification; contracting out most services was prohibited; and volunteers could not be used if they displaced any city workers. Some of the work rules sounded like bad jokes. Take the so-called "touch and feel" requirements in the Department of Public Works. Sludge first had to be scooped from the water pipes into trucks, then unloaded onto the ground, and then shoveled into another truck. Result: it took 10 people to transfer sludge from the city's water pipes to a dumptruck. At the Department of Human Services, program analysts and supervisors had refused to use computers for word-processing or spreadsheet operations because using a computer was not in the job description. To cut the costs of city government, Mayor Rendell knew he had to go after the extravagant wage and benefit packages and work rules. He also knew he had to play hardball against the very powerful public-employee unions in a union town. His confrontation came in fall 1992, when he rallied the voters of Philadelphia during a strike by public-sector unions. With the public overwhelmingly backing the mayor, the walkout lasted only 16 hours, and Mr. Rendell and the city's taxpayers emerged the clear winners. He was able to win $353 million in wage concessions from the unions over four years, including a two-year pay freeze with only slight increases in 1995 and 1996 (2 percent and 3 percent respectively). Vacation days were cut, as was the city's monthly contribution to the employees' health packages, saving $70 million a year. The mayor also won the right to lay off employees and contract out services, and he eliminated many of the absurd work rules. Are there any lessons here for other cities paralyzed by strong unions? Mayor Rendell's 81-percent popularity rating after the strike demonstrates that the "population of this city," says Mr. Cohen, "cares more about fiscal stability and sanity than they do about giving generous benefits to the municipal workforce." Management and Productivity Improvements Mayor Rendell also has enlisted private-sector help -- at no cost to taxpayers -- in improving city services. Soon after taking office he created the Mayor's Private Sector Task Force on Management and Productivity, composed of 41 CEOs from Philadelphia corporations and over 300 other business executives. Their job is to take a microscope to city operations and design ways to save money, increase productivity, streamline government, and deliver better-quality services. The task force, along with city officials, has identified over 200 cost-saving management and productivity initiatives. They run the gambit, from eliminating 600 traffic signals and replacing them with stop signs to streamlining and modernizing the city's computer information system. Other projects include centralizing fleet maintenance, contracting out some repair work, and eliminating duplication of services by different city departments. Sexy? No, but these changes are saving the city $150 million in the first 15 months alone, according to Mr. Cohen. Meanwhile, about 1,300 positions have been eliminated from the city payroll, and employees who remain are being shifted to high-priority duties. Although the number of police officers was cut by 200 last year, for instance, the city put 100 more police officers on the street. Turning to Privatization Increasing productivity, however, can go only so far in a monopolistic organization with no competitors. Mayor Rendell also is gradually privatizing city services and facilities through competitive bidding. Six services have been privatized so far, including janitorial work in city hall, art museum guards, two trash transfer stations, and maintenance of a local expressway -- all for a one-year savings of $18 million. Another 38 privatization candidates have been identified, including the city print shop, the city's nursing home, and one of the district health centers. According to Linda Morrison, who administers the city's competitive contracting program, cost savings from putting services out to bid average 40 to 50 percent. Moreover, the threat of privatization is having a ripple effect across city government: to stave off privatization, in-house units are quickly discovering ways to trim costs by 20 to 30 percent. "Savings that weren't possible before suddenly materialize once you put a service out to bid," says Ms. Morrison. The mayor also is privatizing the city's parking garages by leasing them to private operators; outright sales will come later when the real estate market improves. This demonstrates political courage. Called "a cesspool of political patronage" by one city employee, the city parking authority is a major employer of politically connected Democrats. While Mayor Rendell's first-year results are impressive, he needs three more years like it to turn the city around. Moreover, he has no effective management system in place to insure that productivity and cost-saving measures do not fall prey to the bureaucracy. Advises one private-sector task-force member, "The effort will never truly be successful until every commissioner and every department head buys into the changes and is held accountable." Mayor Rendell has been able to hold the line on city taxes, but he will have to lower them if he is to make Philadelphia more attractive to businesses and families. The Neighborhood Mayor Milwaukee is famous not only for beer but for a welfare-state tradition that originates in the city's German, Scandinavian, and East European heritage. Its citizens long have had great confidence in government's ability to do good: many of Milwaukee's mayors this century explicitly have called themselves socialists. By the mid-1980s, however, Milwaukee appeared ready for a change. Big and generous government had not come without a price tag -- high taxes and a welfare system associated with high crime, family breakdown, and neighborhood decay. As in other Northeastern and Midwestern cities, rising taxes, crime rates, and deteriorating schools were driving businesses and middle-income residents to the suburbs. Milwaukee now has a Democratic mayor who is trying to wean the city's citizens from the notion that government can solve all their problems. A former state senator, John Norquist first was elected mayor in 1988, at the age of 38. Mr. Norquist had earned a reputation in the state Senate as being in the left wing of the Democratic Party. According to one longtime observer of state politics, "If there was a bill to declare Managua the sister city of Milwaukee, Mr. Norquist was always out front." However, Mayor Norquist has become much more skeptical of big government. While still liberal on social and environmental issues, he now advocates free trade and school choice, and calls for abolishing the welfare system. He calls money from Washington "the gift that stops giving" and says there are "a lot of federal programs for cities out there of dubious nature." With the motto, "You can't build a city on pity," Mr. Norquist set about dealing with each of the city's major problems. To keep down the cost of living in the city, Mayor Norquist has cut property tax rates in each of his five years in office. The actual tax bill for most property owners has stayed about the same, or even increased for some, because assessments have risen. Without the rate cuts, however, taxes would have been $25 million higher. He successfully opposed a $366-million spending referendum for schools, arguing that higher property taxes would force more people out of the city. Measuring Outcomes Instead of Inputs Mayor Norquist also is keeping Milwaukee's spending growth below the rate of inflation. He is doing this in part by setting up a new budget process. In the private sector, managers are given performance tests and rewarded for increasing productivity. In government, the budgeting process often rewards managers for "growing" their departments. All too often the system rewards the poorest performers: if crime goes up, the police get more money; if the kids cannot read and write, the schools get more money. Milwaukee's new budget system requires department managers to submit strategic objectives, and managers are held accountable for achieving these outcomes. Department managers must identify their core businesses and ask the questions successful private companies ask every day. Does this city service meet one of our priority objectives? And if not, should we stop performing the service altogether? "We're trying to use market forces to generate improvement rather than set up a whole system of rules and regulations," explains City Budget Director Anne Brooker. "By holding department managers accountable for outcomes we are generating pressures from the departments themselves to do away with inefficient city practices." The police department, for example, decided that unlocking car doors for people who had locked themselves out of their cars was not part of its mission, and wasted valuable police time. Now, people who call the police for such assistance are given the phone numbers of local locksmiths. By becoming more efficient, the fire department eliminated two ladder companies without reducing its capability to respond quickly to fires. City departments now are allowed to purchase computer services, rent vehicles, or contract out for other services from private firms. As a result, the city has cut costs, and the increased competition has spurred some internal departments to operate more like businesses. Safer and More Prosperous Neighborhoods Mayor Norquist also recognizes the important role that strong, safe neighborhoods play in maintaining the viability of cities; it is the cornerstone of his approach to governing. To create economic opportunity in low-income areas, Mr. Norquist has put in place a host of empowerment programs: tenant management of public housing, enterprise zones, and working with community organizations to set up incubators for small businesses in depressed areas. Moreover, most building rehabilitation, social and recreational services, and 50 percent of Federal Community Block Grant money are contracted out directly to community organizations. "We believe [the city] shouldn't be doing things that others do better. Neighborhood organizations can respond more sensitively to the needs of donors and clients than we can," says Leo Reiss, the director of Housing and Neighborhood Development. The mayor also understands that for neighborhoods to thrive economically and socially, they must be safe. But ridding a neighborhood of crime cannot be accomplished by the police alone -- it requires strong community involvement. So, as in many other cities, the police department is experimenting with community-based policing. One of its more innovative community policing programs is training landlords to better screen potential renters. The important role that landlords play in keeping a neighborhood strong and safe is well understood by police officers, but often overlooked by policymakers and the courts. Historically, landlords in low-income, working-class neighborhoods adhered to the neighborhood's set of norms and refused to rent to individuals who, in the landlord's judgement, might be a negative force in the neighborhood. Landlords, for economic reasons, desire essentially the same thing as neighbors do for social reasons: responsible and conscientious tenants who will maintain their property. Over the past 25 years, civil rights laws, government regulations, and court rulings intended to prevent racial discrimination unwittingly have made it difficult for landlords to turn away prospective renters or to boot tenants out of their apartments. The result: solid working-class neighborhoods have been ripped apart by a rented house down the street turned into a crack house. Almost by accident, Milwaukee has devised a simple, yet potentially very effective way to fix this problem. Marty Collins, a 15-year city employee, was looking for a way to improve the city's drug addiction-prevention program. Knowing that most drug-dealing in Milwaukee occurs out of rental properties, he reasoned that the only people who really can control the situation are the landlords. Mr. Collins surveyed Milwaukee landlords and found that 70 percent reported having had destructive tenants at some point, yet virtually no landlords were using tenant screening techniques. Many of these landlords were unaware that various legal means allow them to screen out potentially destructive tenants. Just requiring a favorable recommendation from two former landlords instead of one, for example, can eliminate many undesirable renters. Other effective and legal screening techniques include credit checks and inspecting a prospective tenant's current residence. Modeled on a successful program in Portland, Oregon, Milwaukee is teaching landlords how to screen out disruptive tenants. A training manual has been developed, and the city will conduct hundreds of training sessions for landlords over the next year. In addition to the carrot, Milwaukee also is using the stick. After two neighborhood complaints about drugs being sold or manufactured from a rental property, undercover police will attempt to buy drugs at the residence. A successful purchase triggers a city notice to the landlord instructing him to stop the property from being used for drug-dealing. If the problem persists, the city takes the landlord to court and can ask for the property to be confiscated by the city. It almost never comes to this; 95 percent of the time, the landlords voluntarily fix the problem after the city notice. Choosing Parents over Bureaucrats Together with crime and taxes, education is a major cause of the flight of people and jobs from cities. It is no secret that the public school systems in America's big cities are in terrible shape. Yet big-city mayors almost universally have opposed any changes in the education system. Mayor Norquist, by contrast, argues that dramatic change is essential -- that the current public school system should be scrapped. He has no real authority over Milwaukee's public schools; nevertheless, he has used his bully pulpit to support a state-funded pilot program in Milwaukee that enables low-income students to attend private schools. He wants to expand the pilot program, now serving only 600 students, to the entire city. He also has supported another voucher program -- funded by the Bradley Foundation and other private institutions -- that enables more than 2,000 low-income children a year to attend private schools, including religious ones. Mayor Norquist minces no words when he describes the failure of Milwaukee's public schools: "What we have is a school-finance monopoly that is not helping public school children, is suppressing quality, is not customer-oriented, and is overly bureaucratic." It's too bad John Norquist must stand virtually alone among big-city mayors in supporting choice. Even so, inner-city students could do worse than having this 6'7" mayor in their corner. The Visionary Mayor To most politicians, there seems little reason to overhaul city hall in Indianapolis. The city is one of the safest among the 50 largest cities in all the major areas of violent crime. Last year, the crime rate actually dropped. Race relations are remarkably good. The public schools, while not great, are in much better shape than in cities like Chicago and Milwaukee. Indianapolis has a triple-A rating from Moody's -- the highest possible -- and thanks largely to annexation, the city's population actually has grown by about one-fourth in the past 25 years. But Stephen Goldsmith, Indianapolis's Republican mayor since January 1992, is not at all like most politicians nor other big-city mayors. Mr. Goldsmith is a visionary. He intends to make Indianapolis the country's first 21st-century city and, in the process, make his concept of smaller, competitive, and decentralized government the model for the nation's cities. Like Philadelphia Mayor Rendell, Stephen Goldsmith began his political career as a district prosecutor, has been in office only a short 18 months, and quickly is acquiring a national reputation. But that is where the similarities end. While the gregarious, backslapping Edward Rendell prefers the thrill of politics to the day-to-day responsibilities of management, the more stoic Mayor Goldsmith seems more at home crafting policy innovations than in schmoozing with City Council members. Since taking office, the workaholic mayor has embarked on the most fundamental top-to-bottom restructuring of big-city government in decades. Driving this revolution is Mr. Goldsmith's conviction that government is a monopoly, and monopolies, whether public or private, do not work very well. "A monopoly interferes with the free market and makes choices that individuals would not otherwise make," he says. "Government monopoly automatically creates inefficiency." Moving Services into the Marketplace To break up this monopoly, the mayor has embarked upon the most comprehensive competition and competitiveness effort of any major city in the country. To identify opportunities for opening up city government to competition from the private sector, Mayor Goldsmith created a private-sector advisory group called Service, Efficiency, and Lower Taxes for Indianapolis Commission (SELTIC) soon after taking office. The commission is comprised of nine of the city's leading entrepreneurs, who each lead a team of volunteers given jurisdiction over a major functional area of city government -- including the departments of public works, parks, recreation, and transportation. SELTIC's task is to systematically examine city services and ask some very basic questions. Is this something in which government should be involved in the first place? If so, how can we inject competition into the provision of this service? Can the private sector provide the service in a more cost-effective manner than city agencies? So far over 150 services have been identified as competition opportunities; over 40 government services already have been moved into the marketplace. This competitive process has resulted in significant cost savings for the city. A private firm now is doing the city's microfilming for as much as 61 percent less than what it cost the city. Printing costs are as much as 47 percent lower. And chalk up another $1.8 million in savings by privatizing sewer-bill collections. Even when city units have competed against private companies and come in with lower bids, savings of at least 25 percent have occurred. Total savings from competition are at least $10 million to $20 million, according to Skipp Stitt, the lawyer who heads up the competitiveness program. But Mr. Goldsmith is interested in more than just making city hall more efficient. He also wants to make it smaller. He firmly believes that people governed least are governed best, and he is not afraid to say so. "Doing things more efficiently is not the ultimate end of government," explains the mayor. After evaluating the value of the service, it may become clear that "government should just get out of the area." Sounding like the CEO of a major corporation, he constantly is encouraging his department heads to focus on their core businesses, increase efficiency, and abandon activities that provide little value to the taxpayers. The public works department, for instance, decided it no longer needed its own video-production and training center. The transportation department stopped erecting fences on rideways and picking up trash on the sides of streets. The parks department got out of tree maintenance and saved $75,000. Costs to Fill a Pothole When Stephen Goldsmith became mayor, Indianapolis had a great credit rating and slick, four-color glossy financial reports rivaling those of Fortune 500 companies. But when he starting asking questions, like how much it cost to fill a pothole or to clean out the sewers, no one could tell him. Without this data, it was impossible to know whether city services were being delivered efficiently, and he could not accurately compare the costs of public sector delivery with those in the private sector. So Mr. Goldsmith put in place a system called "activity-based costing" to measure the total costs of performing a service. Such costs could include material costs, supplies, equipment, overhead, and personnel costs. Activity-based costing, says Mayor Goldsmith, "is the door which has opened up competition and privatization." The system has progressed the furthest in the city's transportation department under the direction of Mitch Roob, a management consultant whom the mayor lured away from a prestigious local accounting firm. He shares the mayor's zeal for applying successful business-management practices to government. Mr. Roob relates the story of the first target of activity-based costing: filling potholes. The mayor had decided to open it to competition. The line-level union workers soon figured out what was going on, went to Mayor Goldsmith, and said, "You are going to load onto our heads the overhead costs and indirect management costs involved in filling potholes. There are 92 of us truck drivers and 32 supervisors above us," they said. "We can't compete if you are going to attribute their salaries into our costs of doing business." The front-line union employees asked the mayor to free them from the burden of the supervisors. Mr. Goldsmith knew they were right. Despite the fact that the managers were mostly Republican patronage employees who had endorsed him in the election, while the union workers probably had opposed him, he laid off the supervisors -- catching a lot of flak from the local Republican Party in the process. The city unit won the contract. Competition and activity-based costing not only forces the government units to get better vis-…-vis the private sector, it also encourages healthy competition between the different government units. For instance, there are 13 city crews that seal cracks in the roads. "If it's costing your crew a lot more to patch a crack than the other crews, you're out there and exposed. You're going to hustle to get your costs down," explains Ray Wallace, a former Houston Oiler running back who now works with the city crews on estimating the cost of their services. Rebuilding Neighborhoods from the Bottom Up Mr. Goldsmith hammers away at the theme that government too often displaces more important local institutions such as neighborhoods, churches, and families -- the social infrastructure of cities. He believes that the people in the neighborhoods know better than government how to spend their own money. "We tax somebody in a poor neighborhood, we accumulate their limited wealth, and then we hire somebody in another neighborhood -- for example, a parks worker -- to go back into the first neighborhood and do an inefficient service. It's not fair. It's not equitable," says the mayor. In an effort to empower neighborhoods, for example, he has proposed letting neighborhood groups and community-based businesses bid on maintaining their own neighborhood parks and sweeping their own alleys. Mayor Goldsmith knows, however, that it is not only the social infrastructure of cities that has come unravelled over the years; the physical infrastructure also has deteriorated. Last year's Chicago flood was the most visible example of the crisis that has been looming in cities for decades. The signs of decay are everywhere: potholed streets, collapsing sewers, crumbling curbs, and precarious bridges. Why has this occurred? Politicians get credit for cutting ribbons on new projects, not for repairing existing infrastructure. The result: maintenance is deferred on things like sewer systems in order to pay for fancy new sports stadiums. This used to be the way it was done in Indianapolis. You cannot walk a few blocks in downtown Indy without running into a new multi-million-dollar sports facility, while below you, the sewers, some over 100 years old, deteriorate. After years of neglect from previous administrations, the city's decaying sewers, streets, bridges, and parks finally are getting some attention. In order to stave off the kind of infrastructure crisis now apparent in cities like Boston and Philadelphia, Mayor Goldsmith has embarked on a three-year, half-billion-dollar program to restore the city's infrastructure -- all without tax increases. The city's projects are a far cry from the wish list of pork projects that the country's mayors submitted to Bill Clinton for his stimulus bill. You will not find any massive new road projects, light-rail boondoggles, or big, new facilities. Rather, the mayor is rebuilding the city's neighborhoods from the dirt up, literally. Existing bridges, sidewalks, roads, curbs, and sewers are being repaired both to extend the life of this infrastructure and to preserve the asset value of the city's investments. Again, Goldsmith the visionary is looking decades down the road. Says Mr. Roob, who put together much of the capital-improvement plan, "If you don't have good streets and good sewers, the chances of having an economically viable city are nil." Deregulating the City While most burdensome regulations on free enterprise emanate from federal and state levels of government, local governments also are responsible for their share of barriers to enterprise and homeownership. Ever-changing municipal regulations, ranging from licensing provisions to building codes, stifle innovation and entrepreneurship in America's cities. Like other government interventions that distort market forces, city regulations are not safe from scrutiny under the Goldsmith administration. A 12-member civilian panel, the Regulatory Study Commission, has been charged with weeding out unnecessary regulations and evaluating all newly proposed regulations on a cost-benefit basis -- an Indianapolis version of former Vice President Quayle's Competitiveness Council. The commission is taking a look at all kinds of regulations: development codes and standards, zoning, licensing provisions, occupancy requirements, and health and safety requirements. Leading the effort are Gene Lausch, an attorney and 25-year veteran of city government, and Tom Rose, a former Los Angeles television reporter. They have exposed all sorts of bizarre, outdated regulations. One city ordinance, for instance, required all milk cows to be licensed by the city -- the rule had not been enforced since 1961. In dollar terms, the commission's largest first-year issue was forcing the Air Pollution Control Board to rethink proposed regulations that would have made the city's asbestos rules among the most burdensome in the nation. Estimated savings: $16 million to $50 million a year. Mr. Goldsmith's deregulators know that their biggest political challenges are yet to come. They now are closely examining the possibility of deregulating taxis, and soon must look at regulatory restrictions supported by powerful and often very wealthy interests -- among them development standards, signage restrictions, landscape requirements, and zoning laws. They are determined to proceed even though they expect bitter opposition. Whatever mayors do, the communications, transportation, and information revolution of today's economy has destroyed some of the historic advantages of urban life. Fax machines, next-day cross-country package delivery, phones with video monitors, and suburban shopping malls and gourmet restaurants with plenty of parking all make it less necessary for people and businesses to remain in cities. A house in the country -- or at least in the suburbs -- remains the American dream for most families with children. Modern technology now makes this dream easier to achieve. Cities, of course, still have enormous advantages of their own: the grandeur and beauty of civic buildings and public squares, world-class theaters and museums, the hustle and bustle of city streets, the neighborhoods with their rich traditions, the ability to get places by walking, and the energy and vitality of the people, many of whom are immigrants, who still come first to cities to raise families and build careers. Many cities also could become more attractive economically, as suburban taxes rise and land costs in suburbs begin to surpass those of metropolitan areas. Cities Can Work Yet if big cities are to escape the nightmarish, crime-ridden future like that portrayed in the post-industrial movie Blade Runner, conditions in them must improve dramatically. As long as the good in cities is outweighed by the bad -- abysmal schools, skyrocketing crime, high taxes, bloated bureaucracies, and shoddy services -- people and businesses will continue their flight. This need not happen. In different ways, in different cities, Edward Rendell, John Norquist, and Stephen Goldsmith are demonstrating that big cities can work -- if the right policies are adopted. Their success confirms that by applying a dose of fiscal conservatism and competition to city government, basic services can be provided effectively without higher spending and new taxes. They are showing the positive effects of bringing in the local business community to help cut back city hall, rather than pushing businesses away with ever-higher taxes and regulations. They are revealing how -- by using markets instead of mandates and empowering neighborhoods rather than bureaucracies -- problems can be overcome that once seemed unsolvable. They have learned that to reduce crime, police must be reconnected to the community, and neighborhood residents and landlords must be given the empowerment to maintain civic peace. City dwellers across America are beginning to take notice. Running on a platform of tax cuts, school vouchers and reducing the city's workforce, Bret Schundler became Jersey City's first Republican mayor in 75 years. Mr. Schundler won the May election with 68 percent of the vote in a predominantly Democratic city. In June, Republican Richard Riordan was elected mayor of Los Angeles on a platform of privatization and more police on the street. These elections prove that voters who love urban life are recognizing that cities are too important to be left to a business-as-usual City Hall. WILLIAM D. EGGERS directs the Privatization Center of the Reason Foundation in Los Angeles. To reprint more than short quotations, please write or FAX Ben Morehead, Associate Publisher, Policy Review, 214 Massachusetts Avenue, NE, Washington, DC 20002, FAX (202) 675-1778.