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March 30, 2009

Re:     Local Unit Alignment, Reorganization and Consolidation Commission Adopts Report

Dear Mayor:

Today in Trenton, the Local Unit Alignment, Reorganization and Consolidation Commission (LUARCC) adopted its first biennial report, as required by the Legislature. Governor Corzine had anticipated this report and mentioned its importance in his State of the State Message on January 13. (The text of that speech is available at
http://www.state.nj.us/governor/news/speeches/20090113_sos.html.)

In less than a year since its organization, the Commission, which was created to discover more cost efficient means of delivering vital local services, has made great progress. But recognizing the complexity of its mandate and the need for further study, this report does not include the ‘concrete recommendations’ requested by the Governor. Nor does it include specific calls for consolidations, mergers or service sharings. It, instead, exhibits thoughtful patience, which will allow the Commission to proceed in a careful and professional manner, respecting the magnitude of its charge and the importance of its findings to the people of our State.

Though not yet posted, the report adopted today should soon be available on the LUARCC website at http://nj.gov/dca/affiliates/luarcc/.

This report includes a number of observation and findings with which the League can agree and support. These include the following (with our emphasis added).

  • “Among the questions Rutgers was asked to address was the optimal size of a municipality from the standpoint of efficiency.  Its findings were inconclusive.”
  • “The literature suggests caution in drawing simple conclusions about the cost-efficiencies to be gained through consolidation.  A study focusing on the organizational and personnel effects of the Athens-Clarke County, Georgia consolidation found that the efficiencies identified in the study appeared to be derived from the political climate to cut spending and not from efficiencies achieved by merging the two governments. Testifying before the Joint Committee on Government Consolidation and Shared Services Committee on September 6, 2006, Enid Slack noted that costs had actually risen since the amalgamation in Toronto, probably due to increasing salaries to the level of the highest paying municipality.”
  • “A Monmouth/Gannett poll undertaken in New Jersey and published on October 25, 2006 reported that when asked their opinion on property tax proposals, most respondents supported municipal mergers if property taxes were reduced by 50%.  There is no literature to suggest that any municipal consolidation will guarantee a decrease in property tax of this magnitude.  This suggestion is reinforced by Commissioner Casey’s analysis of the magnitude of expenditures on core municipal functions relative to total municipal spending.”
  • “This lack of agreement on the correlation between municipal size and spending is supported by the research conducted by Commission member Robert Casey.  His research comparing the municipal tax requirements for each municipality grouped by county and population size failed to find a consistent correlation between size and core municipal expenditures.  In fact in a number of municipalities, an inverse correlation was identified.
  • “… the research does not support the use of population size alone as the determining factor in a decision to consolidate or to initiate a consolidation feasibility study.”
  • “According to Rutgers’ review of the literature:
  •  
    • The most significant lesson from the literature is that consolidation is beneficial in some situations but not in others; there are no general parameters given to make this determination.  Rather, a case-by-case analysis is necessary, evaluating the goals of the consolidation against the realistic possibility of how those goals would be furthered by a merger…  The literature does indicate that consolidation is more successful if implemented voluntarily….”
    • “The potential for identifying cost savings in service delivery through realignment is considerable, according to the Rutgers studies prepared for the Commission.  To summarize their review of the research:
    • ‘For services that show economies of scale, such as infrastructure based services (water utilities, for example) or specialized services (crime labs, for example), contracting with a regional provider (including shared services), regionalized special districts, centralized services, joint boards, or regional policy groups may all be more efficient and effective than directly delivered services.   If regional coordination is beneficial to the delivery of the service, such as land use planning, regional efforts are more appropriate than local efforts.  This could take the form of regional policy groups, joint boards, regionalized special districts, or county or other centralized services.’”
    • The importance of the SHARE program in encouraging municipalities to study and implement shared services programs to improve the efficient of municipal service delivery systems.

There are, however, some observations and conclusions that the Commission has reached in this report with which the League would disagree.

  • “It is hoped that the development of the “User Friendly Budget” reporting system and the development of performance benchmarking by the Local Finance Board, both mandated by law, will help resolve some of the existing data shortcomings.”
  • We have questions about the utility of, and the cost and time involved in producing, the “user-friendly budget.” Local government does not exist to provide data and reports to the central government. It exists to deliver services to and programs for its citizens. In these trying times, both municipal and state workers should focus their energies and resources on providing direct services to the public.  Municipal residents who are truly interested in understanding the budget spend time and energy truly understanding it now.  They do not need it in yet another format.

LUARCC Commissioner, Mayor Gary Passanante of Somerdale, raised concerns, on the record, about the potential for this to become an unfunded mandate. And DCA Commissioner Joe Doria, another member of the panel, agreed that this could well be the case. Commissioner Doria also cautioned against asking local governments, many, if not all, of which are operating with reduced staffing, to do anything that would further strain their budgets and their personnel.

Regarding performance benchmarking, the work conducted so far makes it clear that it is good for municipalities to measure their progress from one point in time to another.  It is questionable, at best, to try to measure the performance of one municipality against another.  There are too many idiosyncrasies involved in the demands for services by municipal residents to permit accurate and useful comparisons.

The report asks for more measurement and analysis.  Again, many municipalities are having difficulty finding sufficient monies to pay for the cost of basic police, fire and public works services.  And again, our role is not to make the work of any State commission, board or bureau easier; but to make the lives of our citizens better.

Despite these objections, we salute the Members of the Commission for their dedication and commitment to the job they are doing, and for the respect and attention they have demonstrated for local government in New Jersey, and for you – the people who make it work.

If you have any questions or comments, please call Jon Moran at 609-695-3481, ext. 121.

Very truly yours,

 

William G. Dressel, Jr.
Executive Director

      

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