Senate Fiscal Agency issues report on consolidation

The Senate Fiscal Agency, the non-partisan agency working on behalf of the Senate, issued a report in August that evaluated the evidence of cost savings associated with consolidation of governments.  The paper examined three different issues: the impact of political consolidation on the cost of government, the impact of service cooperation on cost and the impact of having fewer governmental units improving economic performance.

The report looked at local government spending on a per person basis on a nationwide basis and then looked at the number of local units of government within each state. The report concluded that there was no obvious correlation between the cost of operation and the number of local governments.

As the report moved into the issue of cooperative services, the conclusions became less absolute. Generally, labor-intensive services do not benefit as much from cooperative services as do capital-intensive services.  The report points to fire services as one area where cooperation can be beneficial. This is especially true for specialized equipment situations. Issues such as the need for ladder trucks, hazmat teams or dive teams do not need to be provided in every community. They do need to exist somewhere in the general proximity.  These are areas where cost savings can be found.

The questions of whether structures like "unigovernment" spur on economic development are at best inconclusive. People point to Indianapolis as a success of a government system where multiple governments were consolidated and positive economic growth has occurred. On the other hand, the report points to the merger of Louisville/Jefferson County and the merger of Jacksonville and Duval Counties in Florida. In these cases, the mergers have not produced any identifiable boost in economic development. The study points out that consolidating government operations does not mean that economic development will follow, but there are situations where economic development did follow.

The study reinforces everything that MTA has been stating for years. Opportunities exist to save money through cooperative ventures. However, this is not the case in all situations or even in most situations.  The best results occur when local communities can identify their specific needs and tailor programs to meet those needs. The one-size-fits-all approach is not a magic answer to all questions.  The full Senate Fiscal Agency report can be found at: http://www.senate.michigan.gov/sfa/Publications/Notes/2010Notes/NotesSum10es.pdf.