New Hersey State of Muncicipalities FacebookTwitter Linkedin with NJSLOM       





   
A Review of Recent Survey Results

 

Can We Expect
More Municipalities
to Consolidate
or Regionalize


Kathe Callahan Leila Sadeghi 
By Kathe Callahan, Ph. D.
Associate Director, Center for Executive
Leadership in Government
Rutgers, The State University
& Leila Sadeghi, Ph.D.
Assistant Professor, Educational Leadership
Kean University

The following white paper was written for NJLM’s Educational Foundation. The text can be found at www.njlmef.org/2011_MunicipalMgmtSurvey.pdf. We are publishing it here in its entirety.

On November 8, 2011 the residents of Princeton Borough and Princeton Township approved a ballot measure to create a consolidated Princeton effective January 1, 2013. Many people were surprised by the outcome. Others saw the marriage of the two towns as inevitable—an idea whose time had come. For the past 60 years consolidation had been the subject of serious discussion and three ballot initiatives, but it wasn’t until last month that all the talk turned to action. So what was different this time around? Could it be that the economy has tanked, state aid is drying up, foreclosures and tax appeals are on the rise and the 2 percent property tax cap that goes into effect next year combined to create the catalyst? The thought of merging municipal services and functions is all the more attractive if, as a study commission concluded, the merger of the two Princetons will result in a savings of $3.2 million.

People standing on large puzzle pieces

Should we expect to see other towns follow suit? And if so, what towns are likely to introduce consolidation plans in the next five years? The likely suspects are the 22 doughnut towns, where one town surrounds the other, and many municipal functions are already consolidated. Could Chatham Township and Chatham Borough be the next in line—or for that matter any two towns that share the same first name but have different last names? And what about the Wildwoods—can the five separate municipalities on this barrier island become one? It will be interesting to see what happens in Scotch Plains and Fanwood where residents, not the municipal governments, led an effort to form a study commission to assess the potential value of consolidation.

  You have to wonder if the urge to merge has become more than an urge in the Garden State. According to a Rutgers-Eagleton poll, conducted in the spring of 2009, New Jerseyans appear open to merging. The poll found that 54 percent supported consolidation and 70 percent believed mergers would not have a negative impact on the quality of services provided. More recently, a survey of municipalities conducted this summer by Rutgers Center for Executive Leadership in Government, in partnership with the New Jersey League of Municipalities, found that 82 percent of the 170 municipalities responding had entered into a shared service agreement in the past year. Granted, we’re not talking consolidation here, but we are talking about new partnerships and collaborative agreements that go beyond town borders.

While the majority of the clerks and business administrators responding to this survey indicated they had entered into shared service agreements in the past year, it was difficult, at best, for them to specify the anticipated cost savings from such an arrangement. In fact, the respondents were fairly equally divided in their agreement/disagreement/uncertainty with the statement “shared service agreements bring about minimal cost savings.” So you have to wonder what’s next. If these towns aren’t certain about the cost savings realized through sharing an animal shelter or municipal court or police dispatch will they continue to share services? Might they take a step back and provide the service on their own or might they take a step toward consolidation?

In this same survey, when asked to what degree they agreed or disagreed with the statement “The best way to reduce costs while maintaining service quality is through regionalization” 41 percent of the respondents agreed or strongly agreed, 31 percent weren’t sure and 28 percent disgreed or strongly disagreed. This is a different mindset than 15 years ago when another Rutgers survey showed that municipalities were more enthusiastic about privatizing services than sharing them. A changed public management philosophy combined with an economic crisis may very well lead decision makers to rethink government functions and reconceptualize how they are delivered.

At the November NJLM Conference in Atlantic City, Reagan Burkholder, a municipal performance consultant, compared the tax burden and cost of municipal service delivery of one New Jersey community with a population of approximately 98,000 residents and covering 23 square miles, to nine smaller towns that collectively had close to 98,000 residents, similar demographics and geographical size. The data he shared supports the savings found in consolidation—the total 2009 budget for the larger municipality was approximately $50,000 less than the combined total of the nine smaller towns and the tax levy in the larger community was slightly more than $400 less per capita than the collective per capita tax levy of the smaller towns.

However, consolidation isn’t simply about the tax levy. Dr. Raphael Caprio, a Professor of Public Administration at Rutgers University, points out that several studies suggest larger, more heterogeneous communities, the outcome of consolidation, may actually require a broader range of services, thus dissipating most, if not all of the “anticipated savings.” Further, according to Caprio, under most current practices a wide-area consolidation of selected services creates a supplier quasi-monopoly with decreased ability of recipient municipalities to be assured of a continued value to cost proposition. So, while consolidation reduces the overall number of governments, it increases the size and scope of the remaining governments, which begs the question is bigger government necessarily better government?

In five years we will have a better understanding of the magnitude of cost savings and operational efficiencies realized through the consolidation of Princeton Borough and Princeton Township. Until then, we should continue to explore alternatives. We shouldn’t dismiss consolidation or regionalization as something that will not take place in New Jersey. And we anticipate that over the next several years, New Jersey along with its tristate counterparts will explore these strategies more readily than ever before.

 

First published in New Jersey Municipalities, Volume 89, Number 1, January 2012

Privacy Statement | NJLM FAQ
New Jersey State League of Municipalities • 222 West State Street • Trenton, NJ 08608 • (609) 695-3481
  FAX: (609) 695-0151