DALLAS -- Cities in Texas and other states need to reduce disparities between the central metropolitan area and the suburbs, contain urban sprawl, and revise outdated tax structures to and revise outdated tax structures to remain competitive in a global economy, a former city manager of Austin, Tex., said last week.

"The recent interest in reinventing local government is not a fad," Camille Cates Barnett said during a speech to the Southern Municipal Finance Society in Dallas. "Unless we change how we govern, we will not be competitive in a global economy."

Cates Barnett, who has also held top positions in the city governments of Dallas and Houston, said municipalities face several disadvantages in coping with an emerging economic environment that calls for better partnerships between cities and transnational firms and a stronger regional focus.

One problem is the disparities between central city and suburban residents in income levels, education, and other factors. Cates Barnett said the gap between the suburbs and the central city was shown to be the biggest indicator of the social and economic health of a region, according to a study of 522 cities published in David Rusk's "Cities Without Suburbs."

In the healthiest regions, Rusk reported, central city residents' income was close to that of suburban residents. Once central city income fell to half of suburban income, Rusk wrote, a city could not survive economically.

Cities also have to deal with outdated tax and governmentalstructures, Cates Barnett said. For example, she said local governments in Texas need more or different sources of revenue because current ones are inadequate.

Cates Barnett said property taxes are outmoded because most of the economy is not land based, and that sales taxes fall out of local control. An increasing reliance on fees and charges in Texas and other cities is a major financial trend, she said.

Urban sprawl exacerbates wealth and service differences between the suburbs and central city, Cates Barnett said. In Texas, "cities sprawl, but we don't have effective ways to deal with it," she said.

She said suburbs encircle even socalled elastic cities, such as Houston and Austin. Such cities have aggressive annexation policies and a relatively good disparity ratio.

Cates Barnett suggested several ways to improve local governments and their ability to compete.

She said local governments could provide incentives to prevent urban sprawl and encourage sharing of financial resources. For example, transportation lines could be built to guide and encourage growth and economic development in underutilized areas, and tax base sharing, already used in states such as Minnesota, could be implemented.

Barnett also said that zoning ordinances, regulating types of development and setbacks, could be revised to discourage urban sprawl, instead of encouraging it.

She said bond rating agencies use a disparity index as part of their assessment of regional economic trends.

Barnett, one of several speakers at the Southern Municipal Finance Society meeting, now teaches city management at the LBJ School of Public Affairs at the University of Texas-Austin after resigning as Austin city manager in January amid a financial controversy at Brackenridge Hospital in Austin.

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