GUEST COLUMN.

For more than a century, reformers have argued for the consolidation of local governments in the United States.  The patchwork of local governments in the US is seen as redundant and wasteful, propping up old political powers, and unfit for the needs of a modern economy. The traditional reasons people have encouraged consolidation have been to increase accountability, efficiency, and equity in local government

But despite the hoped-for benefits of consolidation, it is very rare. In the post-WWII era, only 15% of consolidation attempts were successful.  Most successes required multiple efforts, and there were fewer than 200 attempts in a country with over 3,000 counties.

One reason why this may be the case is that consolidation does not typically result in a decrease in government headcount or a decrease in taxes for the jurisdiction. What’s more, scholars Suzanne Leland and Kurt Thurmaier, authors of City-County Consolidation: Promises Made, Promises Kept? looked at a number of case studies, and pointed out that several consolidations, for example Lafayette, Louisiana, were considered fairly minor governmental reforms, especially when the pre-existing governments were already small,

In fact, when the University of Georgia Public Administration program studied that merger, it discovered that the primary push came from county residents who wanted urban services extended and saw merger as an easier method than repeated annexations.

But there is another potential reason why consolidations might make sense for some entities: The desire to solve a specific goal which is beyond the capacity of the existing governments but could be achieved by both.

Gaining capacity through mergers is not uncommon in organizations.  The purpose of organization is to take inputs, process those inputs, and produce a new output.  If an organization needs a particular input or process that is controlled by other organizations, merger is a way to acquire that necessity.  Local governments, especially small local governments, could very easily have such needs.  For instance, Wyandot County, Kansas wanted to build the Kansas City Speedway, but while the city had professional staff capable of driving the project, only the county had the necessary resources. Merger brought all the necessary elements into one organization so that the resources could be deployed in a successful large capital project.

At the most basic, mergers pool additional resources and personnel who do not ultimately save any money for the jurisdiction.  However, the larger resource pools create opportunities to seek non-own-source revenue in the form of grants, or ease the combining of existing professional skills to manage specific large projects such as the Kansas City Speedway or expanded services for Clarke County, GA.  In the absence of such a problem (as in Wilmington and Knoxville) there is no reason to merge.

Smaller local governments can also use consolidation to address state legislation restrictions they confront.  Access to intergovernmental funding, state limitations on debt issuance, and other legal limitations are tied to jurisdictional population size and need.  Additionally, beyond legal limitations, the politics of intergovernmental revenue favor larger jurisdictions (where there are more votes).  Consolidation can increase eligibility and political influence capacity.  Among other things, this would explain the growing number of mergers among small jurisdictions.  Reaching a certain population threshold opens more intergovernmental revenue options.

Our recent study examines intergovernmental revenue for local governments in successful consolidation cases from the post-World War II era. We compared the trends in intergovernmental revenue (adjusted for inflation and calculated per capita) before and after consolidation using an interrupted time series design. Preliminary results indicate a significant increase in intergovernmental revenue immediately following consolidation, with continued growth observed throughout the post-consolidation period.

Though there are numerous other factors still to investigate, this shows evidence that consolidation and mergers could be a response to capacity needs.  Mergers do not increase efficiency or own-source revenue, but they provide the necessary administrative ability to access intergovernmental resources.

It is also, then, understandable why this would be most popular among smaller cities that are most likely to have capacity limitations, and why larger cities like Knoxville and Wilmington would ultimately decline to merge with their counties. 

A further question to consider is why centralized control of these capacities is necessary and why the use of a special or joint government would not work.  However, this increase in intergovernmental revenue capacity demonstrates that merger is not inexplicable, but that it serves a particular purpose for local governments.

The contents of this Guest Column are those of the author, and not necessarily Barrett and Greene, Inc.

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