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The LUARCC
A Law to Suggest and Encourage
Local Government Consolidations
Gregory C. Fehrenbach
By Gregory C. Fehrenbach
Coordinator, League
Interlocal Advisory Service

Over the past decade, the federal bipartisan Base Realignment and Closing Commission (BRAC) has enjoyed a reputation of considerable success. The key, many believe, to the BRAC’s success has been its ability to operate outside of the traditional political pressures that typically affect such policy decisions. Leaders in our Legislature were intrigued by this commission’s success and believed that it could serve as a reasonable and effective model to effect mandatory consolidations of local governments and school districts.

So intrigued were they that serious and considered efforts took place in the Joint Legislative Committee on Government Consolidation and Shared Services. In the end, P.L. 2007, c.54, the law creating the Local Unit Alignment, Reorganization and Consolidation Commission, took on a very different profile. This article will discuss the concepts and beliefs that serve as the underpinnings of this new law.

On the ides of March of this year, the Governor signed the Local Unit Alignment, Reorganization, and Consolidation Commission (LUARCC) law. While the original bill (S47) was introduced by Senators Joseph M. Kyrillos, Jr. and Stephen M. Sweeny, during the deliberations of the aforementioned joint committee, numerous modifications were made to the original bill. So many changes were made that Senator Kyrillos, who sat on the joint committee, would not accept attribution for the resulting bill. He strongly believed that forced or mandatory consolidation of local governmental units was the only way in which they would merge to achieve greater efficiencies and therefore cost less. What is this law supposed to achieve?

The Principals Behind Law The Federal BRAC commission is bipartisan to encourage greater acceptance of its determinations regarding the future of our country’s military bases. The Congress may only vote BRAC recommendations up or down as an integrated and comprehensive package. Legislators may not choose the portions of the report that they like and reject those they dislike. This all or nothing characteristic is said to increase the likelihood that the entire package of recommendations will prevail. Parochial interests cannot affect the decision. Likewise, Senator Kyrillos believed that the influences of local mayors and elected officials might be counteracted by assigning to the Legislature the decision-making authority to approve or disapprove all recommendations for consolidation as an integrated package.

Among others, the League’s representatives made it crystal clear to the members of the joint committee that home rule is not a concept held solely by elected officials. It is a standard, an individual right held close to the heart by the citizens of our cities, towns, townships, boroughs and villages around the entire state. We noted for the joint committee members the potential adverse impact on themselves. The attempt to force a change to choices already made as to where residents live by their duly elected representatives in Trenton would be quite disruptive. This would be true even if the citizens believed the unproven maxim that the cost of government would be greatly reduced if local governments and school districts consolidated. The public wants consolidation to happen, but not to themselves necessarily.
Fortunately, more practical minds prevailed and choice replaced coercion in the legislative initiative. A key feature of the new law in contrast to its predecessor language is the following:

…each recommendation included [in the report] shall be put before the affected voters at the next general election and shall become effective only upon its adoption by a majority of the voters of each affected municipality. (Section 8.a.)

From the perspective of a local government resident and elected official, what resulted from this process is much better than that from which it had evolved. But you must pay attention to the details to be able to determine if this is to be considered good legislation.

The details of the bill follow in outline format to provide a map of the provisions contained in the statute.
Some of the guiding principals that are to be advanced by this law which are set forth in its findings (Section 1.) include:

Findings

  • “The State…currently has 566 municipalities, 616 school districts, and 186 fire districts, each with its own layers of local bureaucracy that contribute to the high property tax burden suffered by New Jersey residents.”
  • “Consolidating local units, structurally and administratively streamlining county and municipal government, and transferring services to the most appropriate level of government for delivery would help to alleviate the property tax crisis…”
  • “Due to legal obstacles, conflicting interests, and local concerns about sacrificing community identity, current laws permitting consolidation of municipalities and sharing of services between local units are seldom used.”
  • “Tough political decisions are often most expeditiously made through the use of bipartisan commissions…”

The law reads that even though municipalities are “creatures of the Legislature,” the “pervasive nature of ‘home rule’ and the political conflicts inherent in mandatory consolidations” proves it necessary to establish a bipartisan commission. The law then sets forth the objectives to be pursued by the commission:

  • “determine…which level of government is best suited to deliver a given local government service,”
  • determine “…when consolidation will reduce the property tax burden for pairs or groups of local units, and”
  • “to make those recommendations to the Legislature for approval by the affected voters in order to make a serious effort to reduce the number of municipalities and other local units in the State.” (Section 1.e.)


Composition of the Commission (Section 3)
As stated above, the composition of the commission is to be bipartisan. This objective is to be effected by a formula of membership outlined below. There are to be nine voting members. These members shall be appointed as follows for staggering terms of office:

  • Commissioner of Community Affairs (or designee)
  • State Treasurer (or designee)
  • Seven public members appointed as follows:
  • One appointed by the Senate President
  • One appointed by the Minority Leader of the Senate
  • One appointed by the Assembly Speaker
  • One appointed by the Minority Leader of the Assembly
  • Three members appointed by the Governor, of which no more than two may be of the same political party (with advice and consent of the Senate)

Of the three members appointed by the Governor, they must also represent the northern, central and southern counties respectively. From this formula it is highly unlikely that the commission will be truly bipartisan as the incumbent cabinet members tip the scale.

One principal provision of the appointment rules is that:

No appointee shall be an elected official of a local unit or county unless that person has significant experience in shared service initiatives and demonstrated success at having implemented such agreements at the local level. (Section 3.b.)

The commission is required to elect a chair and appoint an executive director. The executive director “shall have expertise in one or more local government subjects, such as planning, local finance, geography, taxation, or other relevant fields.” The executive director is empowered to “appoint professional staff qualified by training and experience to serve the commission.” This is all to be done for a cost not to exceed $95,000 per annum. (Section 11.)

What Shall the Commission Do?
The law sets forth a series of responsibilities and a work program for the commission. These include:

  • study and report on the structure and functions of county and municipal government, including local taxing districts, their statutory bases, including the fiscal relationship between local governments, and the appropriate allocation of service delivery responsibilities from the standpoint of efficiency.
  • recommend legislative changes which would encourage the more efficient operation of local government. 
  • consider optimal service levels, ratios of employees to population served, cost structures for service delivery, and other best practices.
  • report its findings to the Governor, the President of the Senate, and the Speaker of the General Assembly, within two years of the law’s effective date.
  • develop criteria to serve as the basis for recommending the consolidation of specific municipalities, the merger of specific existing autonomous agencies into the parent municipal or county government, or the sharing of services between municipalities or between municipalities and other public entities. 
  • Recommendations for sharing services may result from a study focusing exclusively on the sharing of services or may result from a study examining potential consolidation. (Section 5)

Municipalities to be considered for consolidation shall be within the same county and shall also be situated within the same legislative district. There is an existing requirement in the statutes that requires legislative districts to be coterminous with municipal boundaries.

The law establishes in Section 5.b. the criteria the commission shall use to reach their determinations. The law requires at least these criteria to govern their study, but they may use additional criteria if the commission so chooses:

  • Geographic factors such as shared boundaries,
  • Economic costs and benefits
  • Equal distribution of costs and benefits across the entire community
  • Measures that safeguard affected community interests
  • Providing priority to local units that volunteer to be studied

The state government seems to have learned that it often costs money to consolidate local services. Based upon this education, the bill provides that:

When a consolidation or shared service is recommended by the commission, the commission shall recommend for State funding any extraordinary expenses necessitated by the consolidation plan or shared service agreement.  The commission shall recommend that this funding be provided either by funds made available to the commission for that purpose or by the Legislature or State Treasurer as part of the annual State budget process. (Section 5.d.)

Under Section 7 of the law, the commission must annually provide a report “summarizing the commission’s activities during the prior calendar year. If the commission proposes a consolidation or shared service, the commission must report to the Governor and the Legislature no later than May 1st of the year in which the consolidation is to be placed before the voters of the affected local units.

A commission proposal for consolidation of local units or a shared services agreement must address at least the following matters:

  • A description of the form of government
  • Election of officers
  • Apportionment of debt, and
  • “Other issues between pairs or groups of municipalities which the commission proposes should consolidate or share services.” (Section 7.b.)

Once the commission makes a proposal report as stated above, the report takes effect at the end of a 30 day period “…unless, between the date of transmittal and the end of the 30-day period, the Legislature passes a concurrent resolution stating in substance that the Legislature does not favor the consolidation proposal.” As stated above, once this proposal for consolidation takes effect,

…each recommendation included [in the report] shall be put before the affected voters at the next general election and shall become effective only upon its adoption by a majority of the voters of each affected municipality. (Section 8.a.)

Comments on the Process Assembly Speaker Roberts, a major force in the pursuit of local government cooperation and consolidation, has been quoted to say that he strongly prefers the use of “carrots” to the use of “sticks” in the pursuit of efficiency at the local government level. (While we might all argue the existence or absence of efficiency at the local level, public opinion suggests there is little valid debate.) During this last legislative session there has been much attention given to the matter of the cost of local government. One legislator, a former mayor, has talked of the need to end “boutique local governments” because the state’s residents cannot afford it anymore. This law, along with several others, represents the “carrots” preferred by the Speaker. It is the legislature’s attempt to provide all of us in local government with clear notice of what might be down the road: either municipalities, school districts, fire districts, etc. find a way to increase efficiencies through cooperation and even consolidations or the legislature will be forced by public opinion to take more aggressive steps to affect reductions in the number of local governments.

The law requires “the cooperation of the officials and employees of every county and municipality as [the commission] may require.” Local government officials and employees must begin, where they have not done so to date, to critically and dispassionately analyze the financial and operational benefits of greater cooperation and, yes, even mergers. If this does not take place, the legislature has made it quite clear that the future will be more “sticks.”

Other Incentives Performance Measurement (Section 9.)
The law contains other provisions. One of these is that the Local Finance Board, in the Division of Local Government Services, must “promulgate rules and regulations establishing performance measures to promote cost savings in the delivery of services by municipal governments.” The law goes on to identify criteria that the Local Finance Board needs to take into consideration, which include:

  • “differing size of local units,
  • demographic characteristics, and
  • geographic characteristics of municipalities that may have an impact on the demand for, and delivery of, specific services
  • consideration of the measurement process,
  • identification of performance indicators, and
  • design of data collection forms in order to assure consistency of information.”

The Board must develop a “training module for key municipal staff in order to facilitate the institutionalization of performance measurement.” 

Once the Board has completed this work program,

…every municipality shall submit an annual performance report to the Local Finance Board setting forth an assessment of its performance of local government services.  Each report also shall be posted on the municipality’s official web site. (Section 9.c.)

Within two years of adopting rules affecting these performance measures, the board must develop and publicly display “…a municipal report card, indicating the municipality’s performance relative to efficiency standards and how its efficiency changes over time.”

Municipal Efficiency Promotion Aid Program In your current budget you have been receiving about one-half cent of property tax relief through the Legislative Initiative Municipal Block Grant aid program. For several years this has been a formula aid program provided to municipalities across the board to reduce the property tax. This law has converted this formula aid program, in the second year following adoption of regulations by the Local Finance Board to a program, to a program that will distribute aid “to reward those municipalities that meet the performance measures promulgated by the board.” (Section 10.)

The League’s representatives argued strenuously that the removal of a formula aid program would increase property taxes. If the legislature wished to create an incentive program, it should identify new money not recycle monies that are already committed to property tax relief.

What lies ahead?
We are all left to wonder what will be coming down the road in the future. Many legislators were once former local elected officials. Over the years I have often wondered what legislators must have done or thought when they themselves were local officials, for them to now deal with current holders of these offices as less than responsible persons who are incapable of making positive choices for their constituencies. Why would a legislature that is farther removed from their constituency believe that they possess greater insight into the needs of the state’s resident than officials who are working for their constituents in the fields and vineyards of local government every day? Whatever the answer to this musing might be, Trenton has control and clearly is willing to use it.

 

 

 

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