If you ever wonder what kind of economic development might be accomplished in this country with more bipartisan cooperation, consider Columbus, Ohio. This low-key, Middle American metropolis of about 800,000 is becoming something of a celebrity city, talked up in a recent New York Times Magazine piece on the success of Ohio and visited more than a dozen times by presidential and vice-presidential candidates. No wonder. After taking a dive during the recession, Columbus has roared back, with the metro area creating more new jobs than any other city in Ohio over the past two years. In many ways, it's a model for what an economy can do when you admit that growth isn't about tax cuts and austerity but about both streamlining government and investing public money in the right things.
Some of Columbus' success is based on its diversified economy. As the state capital and home to institutions like Ohio State University, it has a large government and public-education sector, though not dramatically so--12.4% of the local economy vs. 11.5% for Ohio as a whole. Its relatively low cost of living, central location (its inland port makes it a logistical hub) and steady supply of talent from 18 nearby colleges, including many community colleges, helps too. The city has a robust manufacturing sector including Honda and Worthington Industries but also big retail and financial-services sectors: JPMorgan Chase actually employs more people there than in New York City.
For all these reasons, Columbus didn't fall quite as far off a cliff as the rest of the state did after the financial crisis. But what really sets it apart are the steps it has taken since. In 2009, Mayor Michael Coleman, a Democrat who has since been re-elected to a fourth term, was faced with chopping roughly $100 million in municipal spending--more than 15% of the total operating budget--to balance it as required by city statute. The mayor started with back-office cuts and moved on to mandatory furloughs, reduced trash pickup and the closure of 12 recreation centers. He persuaded thousands of public servants to forgo raises. He trimmed pensions.
It wasn't enough. By mid-2009, "things were getting worse, not better," says Coleman. "We were at a crossroads. If I cut more, we were going to have to lay off 1,100 public workers, including firefighters and police, and really compromise city safety. I'd also be contributing to unemployment." It was time, says the mayor, to "ask ourselves, What kind of city did we want to be?"
Coleman went to the city's business leaders--a mostly conservative group including major Republican donor Leslie Wexner, founder of Limited Brands--and asked them to support an income tax increase, the first in 27 years. They agreed and helped finance a successful protax ballot campaign, in large part because they believed the mayor had already proved his austerity chops and because he vowed to put a third of the tax hike into development. The plan: give businesses money to retrain workers, pour money into new infrastructure, improve the housing stock and redevelop the city's downtown and riverfront to attract more knowledge workers. "Communities are either moving forward or backward right now, with very little in between," says Wexner. "We chose to strategically invest in our future at a very critical time, and the results are paying off."