Patronage can help cities thrive

As noted in the Inquirer series on the need to reform Philadelphia's Board of Revision of Taxes, Mayor James H.J. Tate sharply criticized property assessments decades ago. Tate's story is worth expanding upon, because it has some unexpected lessons - among them, that reform movements can have hidden costs.

In his memoirs, Tate recounts his rise through the Democratic Party ranks, from committeeman to longest-serving mayor in the modern era. Tate was also a tax assessor in the late 1940s, when the Republican Party controlled the BRT.

Of that experience, Tate wrote that Republican leaders "were not entirely without a sense of responsibility to the city. While favors were commonplace, real estate assessments on Center City business properties were more nearly in line with market values than they are today. . . .

"Our orders . . . were to make assessments between 60 and 70 percent of market value so that City Council could keep the tax rate from rising. This policy gave some smart operators among the assessors an opportunity to do business. They would raise an assessment to, say, 80 percent and then wait for the inevitable reaction. When the indignant taxpayer came in, they would cut the increase in half. Sometimes they did this as a favor, but more often they got paid for it."

Yet, Tate maintained that "although they came from political backgrounds, many members of the tax board developed considerable knowledge and expertise in appraising real estate over the years."

Tate resigned as a tax assessor just before taking his Council seat in 1952, when a coalition of reformers and Democrats took control of the city. Over the next decade, according to Tate, wide disparities in property valuations developed, with poor neighborhoods overassessed and affluent neighborhoods such as Center City underassessed. Representing a working-class district, Tate said he tried but failed to get Mayor Richardson Dilworth, a Center City resident, to deal with the problem.

After his election to his first full term as mayor in 1963, Tate sent Council legislation to make real-estate assessors civil-service employees. The BRT would have been reduced to hearing appeals.

The legislation was backed by good-government groups, Tate recalled. It was opposed by Center City real-estate interests, including major Democratic Party contributors; the BRT; and Frank Smith, the Democratic chairman. It died. Smith, later a BRT member himself, opposed Tate's reelection in 1967, forcing the mayor into a primary contest.

It sounds like a story about the futility of reform. But it's a bit more complex than that.

Denied his party's endorsement, Tate sought support from unions, particularly the building-trades and city-employee unions. Like some of his successors, he agreed to election-year contracts that the city couldn't afford, contributing to huge deficits, which he fought to fill with federal funds.

As many scholars have noted, the patronage system, although vulnerable to corruption, has two advantages over a unionized, civil-service work force: It is probably less costly overall, and it is directly responsible to voters. Columbia University political scientist Ester Fuchs found that Chicago avoided the kind of fiscal crisis that bankrupted New York City in the 1960s partly because its patronage-dependent local party could discipline municipal unions.

Likewise, in his fine history of Philadelphia's economy, University of Pennsylvania Professor Joseph Gyourko notes the high costs of today's heavily unionized, civil-service-protected public sector as compared to the old machine system. "That machine was more corrupt," he wrote, "but it appears to have been able to transfer resources more efficiently."

This isn't an argument for ending civil service or city unions. But it is a cautionary tale about reform. Political parties need to reward followers, particularly if they are to cope with powerful interests, such as businesses and unions, that have such incentives at their disposal. In short, parties need patronage.

But patronage is defensible only under three conditions: the jobs are real, not invented; the workers are qualified to do them; and they show up and do them efficiently. If, on their own time, workers also help solve neighborhood problems and get out the vote, the party and the city are better off.

The lesson for the city: Maybe Tate was right that assessors should be professional civil servants. Maybe. The lesson for the politicians: If you want to preserve patronage, make sure taxpayers get the service they deserve.