Welcome to the New Columbia: The Fiscal, Economic and Political Consequences of Statehood for D.C.
A quick overview: Part I of this Essay will discuss the special fiscal and economic conditions that New Columbia would face. On one hand, statehood would better allow D.C. to take advantage of periods of economic success. In particular, a state of New Columbia would likely be free of the restrictive confines of the Height of Buildings Act, allowing for greater growth when demand for living in D.C. is high.’ Moreover, as has been noted elsewhere, the District would likely also gain greater taxing power (although it would lose some forms of generous federal funding, particularly in its Medicaid program). Yet such benefits come at a price: as a single-city state, New Columbia would face drastic risks in times of downturn. The face that New Columbia would be entirely in one economic region, and the fact that it would exclusively be the center city of that region, would mean almost necessarily that the state would face substantial financial risks in the case of regional and urban-form related shocks. Moreover, states frequently redistribute money from successful parts of the state to the unsuccessful to mitigate regional downturns: New Columbia would not have this ability. What’s more, in the event of financial catastophe, New Columbia would also be ineligible for Chapter 9 bankruptcy, insofar as it would be a state and not a municipality.
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