If I can figure out how to license the phrase cooperation and consolidation, I could retire tomorrow. As I travel around the state and country working on local government issues, I find that it may be the most overused, and in my view, over heralded phrase in local government. My concern isn’t that I hear it so much, but rather that there is a belief that this will solve the ills created by of a decade of declining revenues and a couple generations worth of underfunded legacy costs. I think we are more likely to see Sasquatch flying a space ship than we are to solve a broken financial model with consolidation.
Contrary to popular belief, local governments are for the most part well run and operate fairly lean. Are their advantages to be gained by cooperating with your neighbors or consolidating services? Probably. Economies of scale generally will yield efficiencies that can lower the cost of service delivery, but to what end? If our starting point is two communities that do not provide services to the level we all expect, isn’t it like combining two cars in need of repair and declaring victory because it drives? Is this our vision for the future?
I don’t believe that the greatest challenge is being more efficient nor is the greatest benefit in combining departments or merging services. The single biggest financial burden that our core communities are struggling with are legacy costs. Pending legislation in Michigan will help communities to draw a line in the sand and many already have, but they have no ability change the cost structure for those who have vested benefits or have left service. More needs to be done. In many established communities, the ratio of retirees to active employees is more than 2 to 1 with far more being spent on healthcare for retirees than is spent on active employees. The hurdles both on both the human and political level to address this are substantial, but without real change it is not inconceivable that the only services a community might offer will be to hold elections, collect taxes, and pay and insure retirees.
It’s simply unsustainable.