Tax increase update

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[This is a break in the series on Warren demographics. That series will resume with the next post.]

The Citizen’s Committee met with the City Council Finance Committee and the Mayor yesterday for an update on the use of the income tax increase funds and other items previously agreed to. Dick Thomas gave the Citizens Committee report. Highlights were:

  • Revenue from the tax increase are slightly below expectations, but it’s only been a couple months and no one is worried at this time.
  • Police hiring has been a little slow due to a limited pool of qualified applicants. Two have been hired and another 8 are in the pipeline.
  • Fire department hiring has been better with 12 hires. They have 6 more open spots, but will have to have another civil service exam to make the pool large enough.
  • All $500,000 slotted for road repairs will be spent this year. It will require $1.5 million just to redo the “Priority 1” streets, those in the worst condition, so this will be at least a three year project.
  • The auditor has put the city’s finances on Open Checkbook for the public to examine.
  • The escrow fund is being funded to enable the city to retain the new firemen once the SAFER grant expires.
  • There is still no labor contract between the city and the WFD; the situation is headed for arbitration.
  • There has been no progress on reinvigorating the Housing Court as yet.
  • The city has put most of its unused real estate on the market but have been unable to sell any of it other than one vacant lot on Summit Street.
  • City Council has not yet implemented the use of “Financial Impact Statements” for each piece of legislation, but the issue is being addressed for future action.
  • There was a lengthy discussion on the idea of selling Avalon Golf Course. Mr. Thomas made the argument that it is an asset that provides no return and the city should sell it and use the money for one of the many unfunded capital improvement projects required. It seems likely that this will get a debate in the entire City Council in the near future.
  • There was also a lengthy discussion of economic development, but it was too unstructured to have yielded anything concrete. Councilman John Brown (D-3) urged his colleagues to consider rethinking the current $67,000 per year subsidy for the downtown parking deck as a way to free up funds for economic development.
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House poor

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house.001The most valuable asset most people ever own is their home. Unfortunately for most people in Warren, this has not proven to be a very good investment. Keep in mind that we are talking about median numbers here, so there are exceptions, but the chart tells the tale.

In 1970, the median price of a home in Warren was $16,200. This means that half the houses sold that year cost more, and half cost less. If we adjust the $16,200 for inflation over the following 45 year, that median house should be worth $98,920 today if it had kept up with inflation. Instead, the media home value in 2015 was only $62,900, which is about 36% below the keep-up-with-inflation number.

The problem is a pretty simple example of the effects of the law of supply and demand. We lost a third of our population but people don’t take their houses with them when they move, so we have an over supply of houses. And because so many of those houses are vacant, they deteriorate, degrade their neighborhoods, and further depress housing values.

The most distressing aspect of this spiral is that it is accelerating. Note that while Warren began to fall behind the inflation curve in the early 1980’s, housing values here did increase for many years; we were just trailing the inflation rate. But things took a dramatic shift for the worse in the most recent Census report, which shows that home values actually decreased by more than 13% since 2010.

While the rest of the country was recovering from the recession, Warren’s fortunes, as measured by the value of our real assets, took a significant nose dive.

The Census does not tell us the average age of home owners, but I will offer a final observation from my many hours knocking on doors all over the city. I believe the average age of home owners is quite high — probably over 60 years. And who will by their homes when they retire to Florida or pass away?

I heard the same story many times from older home owners: “I’d sell and move tomorrow if there was anybody out there to buy my home.”

Next: Government budgets

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Income: Looking up at Mississippi

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income.001The last few posts laid out the age and education demographics of Warren, and showed what they have done to the workforce participation rate. Therefore, it will come as no surprise that these shifts have had a profound impact on the income of Warren citizens.

The numbers here are based on median household incomes. This is probably the most common way business and government looks at the affluence level of a community. For those of you who may not be familiar with the term, this refers to the total income, from all sources, of all the people residing in one household; that might be one person, but it might also be 2, 3 or more. The income being measured might come from a job, but it also includes investment income, any income from public assistance, or any other income of any type.

Median” means that half the people in the measured area, (in this case the city of Warren, the U.S. as a whole, and several other states) have income above the number, and half have income below. (This is different than the “average,” or “mean” point.)

pov lev.001Comparing Warren to the U.S. in the first chart shows that our median household income of $29,376 is more than 45% lower than the U.S, median of $53,889. Look closely at the trajectory of the lines in the first chart and you will see that we are falling farther behind with time. The rest of the country rebounded nicely from the 2008 recession, but the slope of Warren’s line turned south for the first time in the 2015 Census, dropping about $1500 per household since 2010.

Moreover, 30.8% of Warren’s population is living below the Federal poverty line, which is more than double the national average.

To put this in some perspective, Warren’s median household income is not only far behind that found in the state of Ohio, it is lower than those in Mississippi, Alabama and West Virginia, the three lowest income states in the Union.mississippi.001

Comparing a city like Warren to any state is not an apples-to-apples comparison, but it probably means more to most people than looking at the numbers for some random small cities you’ve never heard of in far away states.

If you want to know why Warren leads the nation in Dollar Stores per capita, one only need to look at our income numbers and trend.

Next: Home values

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2 + 2 = 3

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workforce.001What do you get when you add an older population to a poorly educated population? You get very low levels of workforce participation. The chart on this page shows the percentage of the population, over the age of 16, who are active in the workforce, for Warren, nine other Ohio cities, and for the U.S. as a whole.

Just under half of our population is working. I probably looked at 20 Ohio cities and Warren’s was the lowest participation number I saw. I selected these cities as examples of some comparably sized cities, plus a few that are larger larger.

The U.S. participation rate of 63.7% is 28% greater than the Warren number. It is particularly painful to report that Massillon is nearly at the national index and far ahead of Warren. We even lag behind Youngstown, which, believe me, is no demographer’s dream city.

Lower workforce participation means not only lower tax receipts, but lower retail spending as well.

Next: Income

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Back to school

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Untitled3.001The education level of Warren’s population is a little like the age issue. Taken just as the overall median, we are 2.4 percentage points below the national composition of 86.7% of the population having at least a high school diploma, and this is a big improvement since 1990 when we were more than 7 percentage points behind.

But it is important to look deeper, which, unfortunately, reveals that Warren’s youngest residents have fallen very far behind the nation. The gap is nearly 10 full points in the 18-24 age group, and 7.6 points in the 25-34 group. Statistically, these are enormous gaps.

Untitled.001Why is this? Again, the census provides no answers, but I think it is safe to say that we did not suddenly start producing less motivated students 30 years ago; it is far more likely that the gap is there because so many of our high school graduates leave Warren at an early age to look for opportunity.

This brain drain is no doubt part of the reason we fall even farther behind when the bar is raised to look at the composition of our population who are college graduates. Warren’s residents are less than 40% as likely to be college graduates compared to the national average. And unfortunately, in this category we are falling farther behind as times goes on, rather than catching up. If the good jobs of the future are truly reserved for the better educated, we are very poorly positioned for the future.Untitled2.001

A recent article in the New York Times by J.D. Vance, who wrote the current best seller, “Hillbilly Elegy” talks about this phenomena, which is another story I heard countless times when I was knocking on doors. So many older people were proud to tell me how well their sons and daughters are doing in Arizona or South Carolina, but there was always a note of sadness in their voices because their children, and grandchildren, are so far away and they know they are never coming back.

Next: Workforce participation

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