Sunday, March 7th, 2010
This is the second and last installment in my mini-series on the downsides of city-county consolidation, or “big box” vs. “small box” government. Part one covers neighborhood redevelopment challenges. For those of you who didn’t read that, I’m not opposed to city-county consolidations at all, and generally think they’ve been positives in places that have pursued them. I am merely examining some of the trade-offs that come with that choice. Like any form of government, this one too has its challenges.
Proponents of government mergers and consolidations typically tout efficiencies and economies of scale that make a consolidated government less costly to operate than separate governments. While I think there may be areas where this is true, it’s easy to find scenarios where the opposite is the case.
One reason mergers make costs go up is because it is almost certain that wages and benefits for the employees in the various districts will be harmonized to the high water mark. For example, fire departments were not part of the original Indianapolis-Marion County merger, but the city has been pursuing additional mergers in this area lately. The merger of the Indianapolis Fire Department with the Perry Township Fire Department is is an interesting case study. 120 Perry Township fire fighters are getting $2,000-$3,000 raises to bring them up to IFD levels. This is actually increasing the cost of providing fire service by $600,000 a year. This is real cash money out the door. There may be valid reasons for merging these departments, but saving money isn’t one of them.
I can’t name a single government merger where salaries weren’t harmonized to the high water mark. There probably are examples, and I’d be interested to hear them, but this is likely the exception more than the rule.
The second reason mergers increase cost is Brook’s Law. Originally coined for the software industry as “adding more manpower to a late software project only makes it later”, this draws attention to the downside of larger teams and bureaucracies. While always an over-simplification, and not directly applicable outside of projects, it is still an interesting insight that productivity goes up linearly with bodies unless you substitute capital for labor, while organizational complexity increases at an increasing rate over time. For something like fire fighting, where there are fewer benefits to raw scale, the overhead itself eventually imposes costs with few benefits in return. For example, the Indianapolis Fire Department already has hazmat teams, dive teams, high rise capabilities, etc. It’s not like combining with Perry Township will enable them to do something they couldn’t do before. IFD already had minimum efficient scale. There would appear to be no opportunity to substitute fixed for variable costs. There are likely some purchasing benefits and the like, but those could have been gotten without merger. On the other hand, this will clearly create a more complex bureaucracy.
In short, I believe mergers, particularly those of general purpose governments or highly visible agencies, typically increase costs.
Dilution of Urban Interests
This is the core of the argument laid out by Savitch and Vogel that I discussed previously. Basically, merger dilutes the voice and clout of the urban core. Among the implications:
- Dilution of minority voting power. (I should note that in places like Europe, expanding the local government box beyond the core might actually bring in more minorities. But their entire systems are different).
- Limiting the power of grass roots or outsider candidates and strengthening the establishment. It should be noted, however, that in Indianapolis complete outsider Greg Ballard was elected mayor in the last election, so clearly this is not entirely the case.
- One size fits all solutions. It is the nature of government to promote uniform rules. Combining an urban core with more suburban areas may result in rules appropriate to neither, or even tilted in favor of the suburbs, such as by adoption of suburban style zoning, which is the case in Indianapolis.
- Shifting of spending to the periphery. Outlying areas, particularly if it is still a developing county, may result in a shift of spending towards infrastructure hungry suburbs. For example, the major parks initiative in Louisville-Jefferson County is a huge ring of new parks in outer Jefferson County called “City of Parks”.
- Limited income redistribution. While not technically a requirement for merger, separate “urban services districts” that cover the old city are designed to firewall off the former suburbanites from contributing towards central city services are common features. I’ve even seen this in smaller scale mergers, such as the merger of the town of Zionsville, Indiana with two surrounding townships.
- Parasitization of the urban tax base. The central city tax base is forced to support region-wide amenities on its own “inside the firewall” tax base, while region-wide revenues to go build suburban infrastructure. Tax increment financing is a typical vehicle for this.
Carol Coletta called regionalism “identity theft for cities.” As a type of regionalism solution, city-county mergers suffer from this. I think that’s a good way to sum it up. Actually, Brookings style regionalism might be better than merger in a way. An approach like the Minneapolis-St. Paul regional tax sharing solution actually allows revenues to flow to places where they are needed, without the firewalls of urban services districts typically created during mergers.
The other challenge of city-county mergers is that they basically kick the can down the road in terms of the problems facing the urban core and inner suburbs. For example, the Louisville-Jefferson County merger “solved” the problem of the suburbanization of jobs (and hence the tax base in a state where local income taxes are a key revenue source). But it didn’t solve anything for the long term. This works today because Louisville has not experienced significant development in its collar counties, outside of a small area of southern Indiana that is itself more or less an “inner city” type of place. When Jefferson County itself fills up, and all the new office parks are being built in Oldham or Shelby County, it will be right back where it started. Unless local leaders use the time between now and when that happens to built a long term sustainable product in the urban core and suburban areas of Jefferson County, this won’t really have accomplished much. No one should be breathing a sigh of relief just because a merger passed. Urban success is not just about lines on the map, it’s about the product.