A Brookings Institution study made headlines in January when it found that Boston has the worst income inequality of any major American city. In doing so, the study obscured the far more punishing reality of Massachusetts cities outside Boston, which have seen far less economic growth and today resemble the worst-hit parts of Rhode Island more than they do Greater Boston.
Springfield ranked 64th for income inequality in that Brookings study. It fared better than Boston because its anemic economic growth means there is little difference in how the bottom and top earners have fared. The city is less unequal than Boston because it faces increasingly concentrated poverty.
The trends in Springfield are not that different from the rest of the middle cities – 14 older Massachusetts cities mostly outside the Boston area. In 1979, the “middle cities’” per-capita income was 82 percent of the state average. By 2009, that number had fallen to 53 percent. Unemployment in some of the cities is twice the rate found in the Boston area.
Middle cities’ woes continue despite significant state aid. Two-thirds of Massachusetts’ 351 communities get less than 15 percent of their funding from the Commonwealth, but a recent Pioneer Institute study found that nearly half of middle cities’ revenues come from the Commonwealth.
The Commonwealth provides more than half of the local revenue base in four of the cities, and that rises to over two thirds for Lawrence. Almost 40 percent of all local aid goes to the middle cities, which make up less than 18 percent of Massachusetts’ population.
Clearly, the current state policy of simply sending money to the middle cities is not moving them in the right direction. While the Commonwealth has moral and political reasons for directing disproportionate local aid to these cities, this approach has failed to reverse a number of troubling trends.
A new approach is needed to unlock our cities’ potential. An effective solution will take more than money; it will require a partnership with the state and real commitments by communities to modernize their schools, policing strategies, regulatory practices and fiscal management.
Pioneer proposes redirecting excess money in the Massachusetts Convention Center Fund (MCCF) to create an Infrastructure Investment Fund (IIF) of $20 million annually to improve infrastructure and jumpstart economic activity in parts of the state that have not benefited from Greater Boston’s boom. Derived from surplus hotel taxes and various fees, the IIF would support investments in middle cities and disadvantaged neighborhoods of Cambridge and Boston each year between 2017 and 2034.
The IIF would be combined with state grants and technical assistance, and offered as a package to cities enacting education, public safety, economic development and fiscal management reforms. Municipal participation would be voluntary; the Commonwealth would make large infrastructure investments in cities that energetically commit to modernizing the delivery of critical public services.
The IIF will not hamstring the Massachusetts Convention Center Authority (MCCA). Even under a scenario that uses far more conservative revenue projections than those the MCCA used in support of a proposal to expand the Boston Convention and Exhibition Center, the MCCF balance will increase each year notwithstanding the annual $20 million draw and the authority’s annual expenses.
Middle cities’ residents, who deserve the same economic opportunities as their Boston-area counterparts, and Massachusetts taxpayers, who currently shoulder much of the burden for the cities’ operation, both have a vested interest in revitalizing these communities. It’s time for the state to invest in infrastructure and create incentives to modernize public services in municipalities across the Commonwealth.
Jim Stergios
Jim Stergios is Executive Director of Pioneer Institute, a Boston-based think tank. Read his past columns here.
Springfield, Mass. (Wikipedia) 
