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OCR for page 348
Urban Governance:
The New Politics of
Entrepreneurship
JOHN J. KIRLIN and DALE ROGERS MARSHALL
Perhaps for the first tune in two decades of breathless announce-
ments of a "new eras in urban governance, in national urban policy,
or in intergovernmental relations, there is some evidence of important
changes in city governance and in governmental roles in the federal
political system.
Most fundamentally, the emerging changes in urban governance
involve increases in the importance of local political and economic
factors and policies. National policies are of less importance in part
because the funding (and sometimes the scope) of such policies has
been reduced. They are also less important because the policy ap-
proaches involved have not proven effective in addressing the issues
of job creation and economic growth, issues that loom large on the
policy agendas of most cities.
It is also very important to recognize that policies that address
the pursuit of economic growth are being made in ways quite differ-
ent from policies that address the delivery of traditional services. It
is not much of an overstatement to argue that a bifurcation in policy
processes is occurring, with two distinct sectors emerging. One sector
is focused on traditional service delivery through tax-supported pub
kc employees (e.g., public education). The other sector is focused on
economic growth/infrastructure provision/land use and increasingly
achieves its purposes without the expenditure of tax funds and with
less intensive use of public employees. The two sectors are not only
348
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THE NEW POLITICS OF ENTREPRENEURSHIP
349
different in goals, resource base, and dependence on public bureau-
cracies. They also differ in participants, beneficiaries, and political
styles. The two sectors are competitors for resources and space on
the public policy agenda. They also complement each other and
interact in several ways, so the conflict is not one of zero-sum.
Increasingly, the national government is reducing its direct policy
involvement with local economic growth and job creation. National
fiscal, monetary, tax, and defense procurement policies affect lo-
cal economies but with much less place-specific intent than was the
case with sewer grants, urban development action grants, or even
community development block grants and grants from the Economic
Development Administration. The national government remains in-
volved in locally delivered programs that affect residents of cities as
individuals, programs such as welfare, medical care, and education.
But these policies should not be considered a "national" urban policy;
they simply have too little direct impact on the economics, physical
design, and politics of cities. States vary in the extent of their pol-
icy involvement with cities as political units and economies, but the
same pattern of commitment to programs that benefit individuals
(e.g., public education, welfare, or health) is often seen.
This paper looks at the changes strengthening urban governance
capacity, examines some theoretical explanations of their causes, and
explores the strength and consequences of the new patterns. To
establish the setting, we first present an analysis of the dominant
approach to urban policy of the 1965-1980 period. This analysis
is followed by an assessment of the dimensions of the changes that
are occurring and an exploration of ways to analyze those changes.
These analyses provide a framework in which to conceptualize the
major causes and features of the changes, emphasizing a shift in dom-
inant theory from service delivery-focused "public administration"
to economic growth-focused "public entrepreneurship." Public en-
trepreneurs try to maintain local business and employment growth-
and thus local government revenues by stimulating private sector
involvement in local economic development projects and urban ser-
vice delivery.
CONTINUITIES IN POLICY THEORIES AND PRACTICES
Despite some apparent changes in national urban policies, in
approaches to federalism, and even in officeholders, the 1965-1980
period was characterized by substantial continuities. The persistent
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350
John J. Kirlin and Dale Rogers Marshall
patterns are easiest to see in formal national urban or intergovern-
mental programs, but we believe they also existed at the local level.
Challenges to these practices began to emerge in the later 1970s;
such challenges have gathered momentum as the 1980s pass.
During the mid-1960s, a major expansion in the role of the na-
tional government occurred. This expansion took the form of greatly
increased numbers of national intergovernmental grant programs,
increased appropriations to grants, and increased national regula-
tions placed upon state and local governments, either directly as
mandates or as conditions on grants-in-aid (Advisory Commission
on Intergovernmental Relations, 1980~. The major elements of these
urban programs - that is, their essential policy theory (definition of
the problem and how to solve it) and political dynamics remained
virtually intact into the 1980s.
There is much diversity in the detail of the programs, and yet
there Is much similarity in the policy theory underlying them. Most
share, for example, the following attributes, which are derived from
the service delivery-focused public administration orientation to gov-
ernment:
.
definition of the "problem" as requiring direct action by pub
kc employees, usually with little attention to the potential role of a
private individual, firm, or organization;
· policy strategies that rely on service provision to achieve the
desired ends;
~ program designs based on implementation through highly
formalized, functionally specific organizations supported by general
tax revenues (i.e., public bureaucracies); and
an emphasis on the distributive and redistributive elements
of choices, as opposed to choices intended to change the available
resources.
The national policies of the 1965-1980 period shared not only a
common theoretical orientation but also similar origins. Individual
members of Congress were overwhelmingly the most important fac-
tor in the origination of intergovernmental grant programs (Advisory
Commission on Intergovernmental Relations, 1981:11-13~. The in-
stitutional constraints on and incentives to the members of Congress
and the institutional features of intergovernmental bureaucracies in-
teracted to encourage the continuation of categorical grants (Chubb,
1985~.
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THE NEW POLITICS OF ENTREPRENEURSHIP
351
Urban governance also exhibited similar patterns. Local offi-
cials shared the policy theories enumerated above. As local govern-
ments became more dependent on federal funds, national policies
and grants influenced their policy agendas, guided resource allo-
cation, and shaped the structures of government. Cities defined
problems as requiring direct action by public employees, emphasized
service provision, and created highly formalized, functionally specific
organizations.
A focus solely on national grants policy is too limiting, however;
it misses many of the critical public policies and private actions
that shape urban areas. "Urban governance, the subject of this
paper, cannot be reduced to national grants policy. Similarly, the
factors affecting urban governance range far beyond Congress and
intergovernmental bureaucracies.
Before the 1965-1980 period, city politics was often studied in
isolation from the larger political and economic context. But the
growing local dependence on federal grants soon led some to see
cities as only subordinate agents in a nationally dominated intergov-
ernmental system, and important local dynamics were often ignored
(Pressman and Wildavsky, 1984; Reagan and Sanzone, 1981~. Today,
a better balance is emerging in the study of cities. Cities are recog-
nized as separate political jurisdictions with their own political and
economic dynamics, jurisdictions that make genuine choices within
significant constraints set by the intergovernmental system and by
economic and demographic trends (Stone and Sanders, 1987:3~.
After carefully reviewing research on the intergovernmental sys-
tem in this nation, Anton (1984) concluded that the national govern-
ment plays a much more limited role in the policies and politics of
local areas than is often claimed. Specifically, Anton argued that the
size of local governments (measured by budget or personnel) is not
determined by national policies or grants, that local governmental
structures are under virtually constant review and reformulation, and
that national grants are both less stimulative and less constraining
of local expenditures than is sometimes suggested. Anton carefully
observed that national policies and grants do have some impact on
local government activities, but those effects are neither determina-
tive nor global. In this nation, and in the European nations he also
reviewed (although less thoroughly), intergovernmental relations are
characterized by mutual dependence and not by domination.
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John J. Kirlin and Dale Rogers Marshall
This brief analysis suggests that three factors shape urban gov-
ernance: (~) theories concerning problems and policies, (2) institu-
tional constraints and incentives, and (3) individual leadership and
policy entrepreneurship.
The 1965~1980 period was one of continuities in national ur-
ban policies and in urban governance because these three factors
were coaligned. Dominant theories legitimated and gave force to
actions by individual policy entrepreneurs operating within facilita-
tive institutions. Kirlin (1984) cans this the period of "aggressive
pluralism," when a new policy often created groups whose newfound
interests could be variously served by government action. Browning
et al. (1984) emphasize the importance of electoral success for mi-
nority groups in this period and, once elected, of participation in the
dominant coalition. Individual leadership or entrepreneurship were
central to the formation of both electoral and governing coalitions.
The Advisory Commission on Intergovernmental Relations (ACIR)
has advanced similar arguments ACIR's analyses of changes in the
federal political system (1981:Ch. 2) identified individual policy en-
trepreneurs operating within the constraints and opportunities of
context as key factors in those changes.
CHANGES IN THEORIES AND CONSTRAINTS
Beginning in the mid-1970s (but more fully visible in the 1980s),
changes occurred in all three of the factors identified in the preceding
section. Theories concerning problems and policies have changed. In-
stitutional constraints and incentives have changed. And, in response
to those changes, the activities of individual policy entrepreneurs
have changed.
Consider first the changes that have occurred in theories. Once-
dominant Keynesian economic theory, which legitimated high levels
of public spending and deficits and provided a nonmoral rationale for
poverty, has been challenged by monetarism, supply-siders, and old-
style conservatives. And even if none of these alternative economic
theories has succeeded in dominating policy-making, taken together,
they have broken the domination of Keynesian ideas, introducing
variations and fluctuations into policy processes (Bosworth, 1980~.
In another instance, welfare policies and their undergirding theories
are under similar attack (I`emann, 1986; Wiseman, 1985), although
such news does not reach the front pages as often as do controversies
concerning economic theories and policies.
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THE NEW POLITICS OF ENTREPRENEURSHIP
TABLE 1 Trends in Median Personal Income (in 1984 Dollars) for Selected Years
and for the Period 1960-1984
. . . .
Men Women
-
Full-time Full-time
Year Families All Only All Only
19,711
28,167
26,433
14,311
18,830
15,600
1960
1973
1984
Change (a),
1960-1973 42.9 31.6
Change (a),
1973-1984
19,060
26,805
24,004
-6.2 -17.2
4,424
6,535
6,868
11,558
15,165
15,422
40.6 47.7 31.2
-10.4 5.1 1.7
SOURCE: Calculated from Council of Economic Advisors (1986:286).
353
Policy makers, analysts, and citizens appear less accepting of
the notion that any problem we encounter can be surmounted by a
public policy. Consider, for example, the growth in self-help/support
groups such as Alcoholics Anonymous, or the great expenditures
made by firms to educate their employees.
The institutional context of policy-making is changing funda-
mentally. Much of the transformation that is occurring can be traced
to changes in the structure of the economy. As service and trade em-
ployment increases more rapidly than manufacturing employment,
the share of jobs in manufacturing declines relative to total employ-
ment. For example, in California, which remains the state with the
nation's largest manufacturing sector (measured in employment or
value added), about 340,000 net new jobs were created in the January
1984-January 1986 period. Yet only 5 percent of those jobs were in
manfacturing; 85 percent were in the categories of trade, services,
and government (Kirlin, 1986~. Because median wages are lower
in service and trade employment, the consequences of these shifts
include pressure on the incomes of individuals and the erection of
barriers to access to middle-class life styles. Table 1 reports changes
in real personal income in the 196~1984 period, showing increases
from 1960-1973 and then decreases in the 1973-1984 period. Women
are the exception to these trends, however; their income continued
to increase but still lagged behind men's income.
These data suggest that fiscal limits on governments mirror the
fiscal stress citizens are experiencing; far from being the work of
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354
John J. Kirlin and Dale Rogers Marshall
"craziest, which was the initial reaction to California's Proposi-
tion 13, fiscal limits may be a rational balancing of citizens' private
economies versus those of the public sector (KirTin, 1982~. More
than three-qua~ters of the states have seen one or another form of
fiscal limit imposed since the late 1970s, and the Gramm-RuUman-
Hollings Act, if it is triggered by high deficits on the federal budget,
may limit the expenditures of the national government. Whatever
the explanation that is offered, growth in public sector revenues has
slowed, as is shown in Table 2, which reports growth rates in total
public expenditures by decade as a percentage of the gross national
product (GNP).
Table 2 reveals the gradual slowing of the relative growth of
the public sector vis-a-vis the total economy; yet the fiscal limits
movement has also had major effects on particular jurisdictions. For
example, in California, $86 billion in cumulative reductions of state
and local taxes have occurred since June 1978, and Proposition 4,
the Gann expenditure limit, is projected to reduce expenditures an
incremental $20 billion over the next decade. The annual reductions
are now approximately $18 billion and wit! increase to $25 billion
within 5 years (compared with actual expenditures of $86 billion by
all California governments in 1985-1986~.
Another consequence of the changes in the structure of the econ-
omy is a shift in the location of jobs. Since the beginning of indus-
trialization, most jobs were created in central cities, but in the past
several years, more jobs have been created in suburban locations
than in central cities. Table 3 illustrates this phenomenon with data
on job creation in San Francisco, California, and in three adjacent
TABLE 2 Growth Rates in Government Receipts as a
Percentage of Gross National Product
D ecade
Growth Rate
1929-1939
1939-1949
1949-1959
1959-1969
1969-1979
1979-1984
55
29
21
18
o
o
SOURCE: Calculated from Advisory Commission on
Intergovernmental Relations (1987:Table 3).
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THE NEW POLITICS OF ENTREPRENEURSHIP
TABLE 3 Job Creation (percentage change in nonagricultural employment) in
San Francisco and in Three Adjacent Suburban Counties, by Industry,
December 1980-December 1984
355
Industry
Adjacent Suburban Counties
San Francisco Contra Costa San Mateo Sonoma
Total 0.8 13.1 4.0 15.1
Construction 3.8 16.5 0.0 7.5
Manufacturing -5.2 5.4 -10.3 18.0
Transportation and
public utilities -4.5 9.2 5.1 10.9
Wholesale trade -5.9 13.6 2.9 28.6
Retail trade 6.7 13.0 13.3 19.9
Finance, insurance,
and real estate -4.9 38.5 13.1 24.1
Services 7.7 23.9 12.1 20.1
Government -2.2 -3.5 -4.4 -0.5
SOURCE: Computed from data provided by the California Economic Development
D apartment.
suburban counties during December 1980-December 1984. As can
be seen, San Francisco was stagnant overall, whereas Contra Costa
and Sonoma Counties had high rates of job creation and San Mateo,
a more mature economy that had grown rapidly in the past, grew
modestly.
These changes in the structure of the economy are major shifts
from the previous patterns on which much national policy was based,
patterns that provided the context for the design of institutions of
city governance. Changes of this magnitude provide new institutional
incentives and constraints for policy makers. In particular, fiscal
resources are often scarcer, although, as will be examined shortly,
some cities have discovered ways to prosper even during these periods
of economic change and fiscal limits.
PROCESSES O1? MOBILIZATION' INCORPORATION,
AND LEADERSHIP
These changes in theory and institutional context, as well as
the increased importance of local political economies in supporting
government services, have focused renewed attention on local gov-
ernments. They highlight the fact that local governments make a dif-
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356
John J. Kirlin and Dale Rogers Marshall
ference. Local political dynamics are continually producing changes
in leaders, institutions, and policies—changes that are quite signifi-
cant.
Examining local governments in this larger context, we see that
local politics is not issueless or groupless. Competition among cities
for economic resources is important, as Peterson (1981) has effec-
tively argued, but it does not eliminate intracity political controver-
sies. Local politics involves continuing contention among different
forces. It is the politics of coalitions, which involves periodic realign-
ments over time at the local level as at the national level (Chubb and
Peterson, 1985~. New events, problems, or populations create oppor-
tunities for new coalitions to form and challenge more established
groups (Fainstein et al., 1983; Shefter, 1985; Stone et al., 1986~.
Individuals play an entrepreneurial role in the mobilization of these
groups.
Problems of equity, representation, and redistribution were the
focus of insurgent coalitions from the 1960s through the m~-1970s.
Fiscal crises moved to the top of many local agendas in the late 1970s.
More recently, the emphasis of such coalitions is frequently economic
development, job creation, and the generation of new revenues for
the public sector. Redistribution issues have been associated with
high levels of conflict, including protest demonstrations. Observing
this conflict, analysts worried about the governability of the city,
fearing that the social order was in serious danger and that disrup-
tion threatened the established political and economic mechanisms
(Banfield, 1970; Yates, 1977~. Others feared that there would not be
enough conflict to transform these mechanisms (Piven and Cloward,
1971~.
City fiscal crises, beginning in New York in 1975, changed the
terms of the debate, and analysts found a new worry: the fiscal via-
bility of the city. Bankruptcy, not group unrest, appeared to present
the greatest threat to social order. City officials chose a variety of
cutback strategies to bring expenditures into balance with revenues.
According to Shefter (1985:220), these strategies were shaped by
"the composition of the political coalitions they depend on for sup-
port and the structure of political organizations and institutions in
their cities. Policy entrepreneurs who played leadership roles in the
reduction of fiscal strain chose adaptive mechanisms and strategies
that were influenced by their ideologies, that is to say, their policy
theories. Shefter has shown that in New York, periodic fiscal crises
have resulted in political reorganization that allows new social forces
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THE NEW POLITICS OF ENTREPRENEURSHIP
357
to be integrated into the city's political makeup, often changing the
balance of power. After the 1975 crisis, city banks, unions, fiscal
monitors, and the mayor became the major centers of power. The
new dominant coalition was weighted toward creditors and against
broad citizen participation.
In the 1980s, attention has focused on the economic vitality of
cities. The changes in the structure of the economy reviewed earlier
are one reason for this shift in focus. In addition, President Reagan's
domestic policies and the 198~1982 recession have increased city
interest in local economic development and the generation of local
revenue. Yet, although there may be a broad consensus on the de-
sirability of development, there is often also disagreement on which
developments are in the city's interest. Specific proposals may gener-
ate controversy concerning location, scale, or environmental impacts.
Developments often have differential effects, unevenly distributing
benefits and losses. In turn, the fact that benefits and losses are dis-
tributed unevenly provides opportunities for policy entrepreneurship
(Stone and Sanders, 1987~.
These changing urban issues are associated with the processes
of change in urban governance—with the mobilization of interest
groups, their representation, and their incorporation into and effects
on urban political processes. The processes and policies of cities, like
those of organizations, depend on the way differences are resolved;
that is, on the political arrangements by which coalitions are formed
and conflict is managed. Thus, attention must be paid not just to ra-
tional policy choice but also to internal political relationships, ideolo-
gies, and interests, all of which are important in shaping the choices
of each interest group and, through their interaction, the public poli-
cies that ultimately develop. In this process of mobilizing interests
and melding disparate elements into effective political forces, indi-
vidual policy entrepreneurs play important leadership roles. They
are critical in identifying, attracting, and organizing individuals into
interest groups and shaping the group's theory base, including its
rationale for existence, its image of the world, and its agenda.
How have these patterns of city political coalitions and leadership
changed in the recent past? How have the political structures of cities
been changing to adapt to new leaders and issues? It is noteworthy
that available data on council members and mayors do not include
information (e.g., partisan affiliation or links to various interests)
that would help identify changes in coalitions. We can, however,
see increases in minority (blacks and Hispanics) and female elected
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John J. Kirlin and Dale Rogers Marshall
officials and changes in political structures. These political changes
were facilitated by the Aggressive pluralism" and larger societal
trends in the 1965-1980 period and are now being institutionalized
in ways that interact with the other changes taking place in urban
governance.
Acreages In the N,~n~ber of Black and Hispanic Elected Officials
The number of black and Hispanic municipal officials has con-
tinued to grow in the 1980s as it did in the 1970s. In 1985 there were
2,898 blacks in municipal office, including 286 black mayors, 27 of
which were in cities with populations of over 50,000. The number of
black local officials has almost doubled since 1975 when there were
only 1,513. A majority of black elected officials are in the South,
with 196 mayors and 1,780 other municipal officials (Joint Center
for Political Studies, 1985~. In addition, blacks are mayors of several
large central cities, including Los Angeles, Chicago, Oakland, De-
troit, Philadelphia, Atlanta, Newark, and Washington, D.C., among
others.
In 1985 there were 1,025 Hispanics in municipal office, includ-
ing 3 Hispanic mayors in cities with populations over 50,000: San
Antonio, Denver, and Miami. Hispanic officials are found primarily
in the Southwest. Texas has 897 Hispanic municipal officials, New
Mexico has 188, California has 165, and Arizona has 104 (National
Association of Latino Elected Officials, 1986~.
These trends suggest that blacks and Hispanics are continuing
to mobilize, to form coalitions, and to achieve representation in city
government as they did in the 1960s and 1970s, although they are
still underrepresented (blacks constitute 11.7 percent and Hispanics
6.4 percent of the population) (Browning et al., 1984~. The signif-
icance of race and ethnicity in local politics is not declining. Local
conditions and structures, however, shape the political mobilization
of minorities and governmental responsiveness to them. Compar-
isons of cities show great variation in the amount of power minorities
have achieved, how it was obtained, and what difference it makes
for policy. The variations depend on differences in history, popula-
tion, economics, political structures and processes, and leadership
exercised by individuals (Browning and Marshall, 1986~.
Minority politics reveals the importance of electoral organizing
and coalition formation in city politics. Variations in minority in-
corporation and political power are shaped by the ability to win
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John J. Kirlin and Dade Rogers Mar~haII
traditional role of the delivery of municipal services to a wide range
of entrepreneurial activities that are designed to stimulate economic
activities, create jobs, and generate revenues. It is this pattern that
leads to the conclusion that a bifurcation in policy arenas is occurring.
Table 4 presents data on the revenue sources of all governments-
the national, state, county, and city. Changes in the composition of
fiscal-year revenues between 197~1977 (just before proposition 13)
and 1983-1984 (the latest data available) are reported. The table
is selective, including only intergovernmental grants (with national
and state grants separated), taxes, current charges, and utilities
revenues; it shows that overall, and for each type of government,
taxes decreased as a revenue source. Additionally, for state, county,
and city governments, intergovernmental grants from the national
government declined as a percentage of total revenue. State inter-
governmental grants increased in importance as revenue sources for
counties and cities, however. Although taxes and grants from the
national government declined, current charges and utility revenue
increased in importance as revenue sources for every type of govern-
ment.
These patterns illustrate a shift from a tax-supported, grants-
lubricated policy system toward a more entrepreneurial policy system
based on charges and fees. All types of government demonstrate some
entrepreneurial elements in their public finances. Even the national
government received 12.1 percent of its revenues from current charges
in 1983-1984, mostly from the postal service. Counties receiver] 15.3
percent of their revenues in the same period from current charges,
mostly for hospitals.
Cities and states provide an interesting contrast. Cities have
experienced much greater constraint on their revenues than have
states, as illustrated by growth rates of 79.9 percent versus 95.4
percent in total revenues, respectively, in the 1976-1977 to 1983-
1984 period. States derived 58.5 percent of their revenues in 1984
from taxes, down very slightly from 58.7 percent in 1977. In contrast,
cities received 33.8 percent of their revenues from taxes in 1983-1984,
down more substantially from 36.8 percent in 1976-1977. Current
charges generated 11.9 percent of city revenues in 1983-1984 versus
7.7 percent of state revenues in 1984. In this period of fiscal stress,
states have fared comparatively well and made the fewest changes in
their fiscal systems. Total state revenues increased faster than any
other type of government, tax revenues were constant as^a percentage
of tote] revenues, and the increase in current charges was the smallest
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THE NEW POLITICS OF ENTREPRENEURSHIP
TABLE 4 Changes in Components of Revenues (expressed as percentages of total
revenues) by Type of Government
365
Revenue Component
Type of Total
Government Revenue
Current
National State Taxes Charges Utilities
All
lg76-1977 523.5 N.A. N.A. 80.1 10.8 2.7
1983-1984 1,015.9 N.A. N.A. 72.4 13.1 3.7
Percentage
of change
(growth) 90.0 N.A. N.A. 75.0 134.6 163.4
National
1976-1977 285.0 N.A. 0.5 85.6 8.8 ~ N.A
1983-1984 531.1 N.A. 0.3 78.1 12.1 N.A
Percentage
of change
(growth) 86.3 N.A. 16.0 70.1 156.4 N.A
State
1977 172.1 26.7 N.A. 58.7 7.0 0.4
1984 336.1 22.6 N.A. 58.5 7.7 0.7
Percentage
of change
(growth) 95.4 65.9 N.A. 94.7 113.1 281.2
County
1976-1977 41.9 12.9 34.2 37.9 11.8 0.7
1983-1984 78.2 7.3 35.3 35.7 15.3 1.1
Percentage
of change
(growth) 86.6 5.9 93.0 75.9 140.3 }75.6
City
1976-1977 71.8 15.7 19.8 36.3 9.6 14.9
1983-1984 129.2 10.0 20.4 S3.8 11.9 18.6
Percentage
of change
(growth) 79.9 14.2 85.2 67.7 123.4 -125.4
.
NOTE: N.A. = not available.
These figures exclude trust funds and are expressed in billions of dollars.
SOURCE: Calculated from Bureau of the Census (1978-1985~.
Of all governments. Intergovernmental transfers from states have
increased modestly as a percentage of county and city revenues, but
this increase has occurred mostly because of reduced total revenues
available to those local governments and not because of the increased
largess of states. Increases in grants from states to counties lag
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John J. Kirlin and Dale Rogers Marshall
slightly behind increases in total state revenues (93 percent versus
95.4 percent); by the same measure, the states are less generous with
cities, a fiscal area in which state grants increased only 85.2 percent.
Strong evidence of the decline in the fiscal importance of inter-
governmental grants from the national government to cities is clear
in Table 4. Such grants declined from 15.7 percent of total revenues
in 1976-1977 to 10 percent in 1983-1984. By 1983-1984, current
charges were a larger revenue source to cities than grants from the
national government. Utility revenues were smaller than national
grants in 1976-1977 but nearly twice as large by 1983-1984. Cities
have had strong incentives to become more entrepreneurial public
financiers, and it appears they have done so reasonably successfully.
Many of the most entrepreneurial activities of cities, in which the
private sector now often finances an activity that would have been
funded publicly a decade ago, do not appear in any available statis-
tical series. (Some attention is given to this phenomenon later in this
paper.)
It is also important to understand the changing composition of
the intergovernmental grants provided by the national government.
Grants for infrastructure purposes, such as wastewater treatment
facilities, have been reduced (Congressional Budget Office, 1985:5~.
Increasingly, the grants systems of both the national and state gov-
ernments focus on income transfers and service provision in the areas
of health, education, and welfare.
For example, consider the shifts within categories Kirlin (1979)
used to analyze changes in grants through the mid-1970s. Those
national grants categorized as focusing on structural weaknesses in
the economy (for example, economic development assistance, com-
munity development block grants, or the Jobs Training Partnership
Act) declined from 10.1 percent of all grants in 1976-1977 to 7.9
percent in 1984-1985. More strikingly, grants that focused on reme-
dying negative externalities (e.g., sewerage treatment facility grants)
decreased from 6.1 percent to 2.7 percent of grants in the same pe-
riod. Grants focused on countering cycles in the performance of the
economy, which represented 6.9 percent of the total in 1976-1977,
did not even exist in 1984-1985. At the same time, welfare state
grants, including income security, health, and a variety of targeted
education and social services grants programs, increased from 55.9
percent of all grants in 1976-1977 to 61.9 percent in 1984-1985.
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THE NEW POLITICS OF ENTREPRENEURSHIP
367
Available statistical series do not include many forms of en-
trepreneurial public finance, especially cases in which costs previ-
ously borne by the public sector are shifted to the private sector.
No aggregation of these expenditures is available, to the best of our
knowledge, even for a single state. In California, a state in which
such public-private bargains are well established, some observers
believe that this is the primary method of financing public works
projects, outstripping direct financing, grants, or public debt (Kir-
lin and Kirlin, 1982~. New institutions are also being created to
enable the private financing of infrastructure within public policy
frameworks, a trend with considerable effects on land use patterns
because the new financing instruments influence decisions in that
arena (Misczynski, 1986~.
Hard evidence on the spread of the theory of public entrepreneur-
ship is difficult to find. It is important to note that there are also
other contenders to replace the policy orthodoxy of the last few
decades. One is ~privatization," commonly defined as turning many
government functions over to the private sector, sometimes through
contracts and sometimes simply by terminating the public policy
or program (Saves, 1982~. The Reagan administration has advo-
cated privatization, and this term has now taken on highly partisan
overtones.
In contrast, public entrepreneurship encourages the broadest use
of public powers but has no preconceived attachment to achieving
public purposes through tax-supported public bureaucracies. Most
of the literature on public entrepreneurship has emphasized infras-
tructure and new development, although attention is also paid to
alternative forms of service delivery (Committee for Economic De-
velopment, 1982; Kirlin and Kirlin, 1982; Leavitt and Kirlin, 1985;
Moore, 1983~. The major associations concerned with urban manage-
ment, land development, and economic development, including the
Urban Land Institute, the National League of Cities, the Public Secu-
rities Association, the International City Management Association,
and the Municipal Finance Officers' Association, have all sponsored
program sessions, training workshops, and publications concerning
public entrepreneurship.
To succeed, political leaders must address problems within the
constraints and opportunities of their time. Policies are an instru-
ment in their task of mobilizing supportive interests, of incorpo-
rating those interest groups into governing coalitions, and then of
influencing urban governance. In the contemporary context, public
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John J. Kirlin and Dale Robert Marshall
entrepreneurship is attractive to urban public officials and to those
who aspire to influence the course of urban governance. It addresses
important problems of economic performance and job creation and
does so within the fiscal constraints imposed on the public sector. A
mayor of the 1960s, such as Richard Lee in New Haven, could build
a coalition in which grants from the national government played
a large role (Kotter and Lawrence, 1974), but today's mayors do
not have that option. Instead, they are more likely to follow the
path of Tom Bradley, whose approach to governing Los Angeles has
emphasized building coalitions with private interests around devel-
opment projects that will stimulate economic growth, job creation,
and increased public revenues (Sonenshein, 1986~.
Two very important factors encourage mayors and other urban
leaders to embrace public entrepreneurship: the alternatives are few,
and public entrepreneurs can achieve dramatic results. Concern-
ing the latter point, Erieden and Sagalyn (1984) studied downtown
shopping centers and concluder! that the new public-private en-
trepreneurial style succeeded in the completion of such projects far
more frequently than old-style (i.e., grants- and regulation-oriented)
redevelopment efforts. Frieden and Sagalyn are cautious regarding
the long-term economic effects of the projects they studied (most of
the projects are only recently completed) and are not convinced such
projects always warrant the substantial public investments made.
But they are certain that the projects do not have the negative im-
pacts of old-style redevelopment and that they are popular politically
with the public officials involved.
CHALLENGES OF PUBLIC ENTREPRENEURSHIP
The changes in urban governance and the interplay among in-
terest groups, dominant political theories, and the policy choices
examined earlier in this paper all underscore the continued govern-
ability of cities. Cities have emerged from the recent period of fiscal
limits, recession, and decreases in grants-in-aid with strengthened,
not diminished, capacity. Although their share of total governmental
revenues has fallen, cities have diversified their revenue bases and
have shifted financing responsibility for parts of their historic activi-
ties to the private sector. They continue to incorporate new groups
into their political processes.
Cities have adapted to complex, unforeseen changes in their cir-
cumstances; they play an increased role in economic development;
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THE NEW POLITICS OF ENTREPRENEURSHIP
369
and city officials have discovered opportunities for successful lead-
ership in apparent adversity. A theme running through all of these
successful adaptations is public entrepreneurship. Cities have not
succeeded by passively awaiting the manna of grants, mandates, or
even policy ideas from the national or state governments. Instead,
they have succeeded through strong, purposeful action. Most im-
portantly, those actions have involved much more joint action with
the private sector (including, among others, firms, developers, neigh-
borhoods, and nonprofit organizations). The greater focus on the
economic functions of cities is also appropriate: cities are critical
locations of economic activity (Jacobs, 1984), and their role in eco-
nomic growth warrants greater attention.
Although the emergence of public entrepreneurship and the con-
sequent bifurcation of policy arenas into one focused on economic
growth and development and another focused on the delivery of ser-
vices are positive developments, they do not answer all questions.
One set of questions that continues to call for answers derives from
the differences between the two sectors. Service providers and en-
trepreneurs face different constraints and opportunities; they may
not work effectively together even in those cases in which they can be
complementary (e.g., the contribution that quality primary and sec-
ondary education can make to economic growth). A major challenge
to public entrepreneurship arises from the structures and routines
of city government. The structures commonly fragment authority
needed for successful entrepreneurship, and administrative routines
(especially of personnel, finance, and procurement), which consume
so much of the attention and energies of city officials, are focused on
service delivery activities rather than entrepreneurship.
Yet another set of challenges arises from perceived (and real)
inequities and corruption that are possible in public entrepreneur-
ship. A dominant definition of equity in our society is Treating
equal cases alike," a definition easily met by service-delivering public
bureaucracies (if you are in this category, you get these services)
but often violated in the more particularistic practices of public en-
trepreneurship (the freeway interchange financed by the developer
will not equally improve the traffic circulation of all parts of an
area). More bargaining between the public and private sectors af-
fords the opportunity for corruption, in either the form of personal
graft or of ceding concern for any public interest in the scramble for
jobs or revenues. But most political systems have proved open to
some level of corruption, and any evaluation that is made of public
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John J. Kirlin and Dale Rogers Marshall
entrepreneurship in this regard should be against real alternatives
and not against an abstract standard.
Moreover, public entrepreneurship is unlikely to solve the needs
of all locations or all groups. San Diego is likely to have more en-
trepreneuria] opportunities than Des Moines because the former is
growing. Both may do better following that strategy than any alter-
native, however. The problem of the underclass has not been solvable
and continues to be a critical issue in many cities, an urba~-area time
bomb. Economic growth, the objective of public entrepreneurship,
has not helped reduce urban poverty, despite Banfield's (1970) hopes.
Lemann (1986) argues that poverty has worsened among poor blacks,
not so much because of the failure of national programs, as Murray
(1984) suggests, but because of deep-rooted cultural patterns made
more visible and given freer rein by the movement of successful blacks
out of central-city ghettos. That movement occurred in part because
of successful public policies to provide economic opportunities and
access for housing to blacks.
Thus, the governability of cities has been demonstrated, at least
in part, by redefining public policy objectives. Problems of poverty,
or of equality of access, remain. These problems are unlikely to
disappear from the national political arena, despite efforts by the
Reagan administration to shift responsibility for them to the states.
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Representative terms from entire chapter:
urban governance
