In response, one PublicCEO reader forwarded me this article from the Wall Street Journal, where writer Conor Dougherty explained a theory that municipal consolidation doesn’t always save money.
The argument, based upon examples in Illinois, show that when municipalities combine, they often share only their equipment and managers, and often retain their workforces. This rank-and-file retention represents the largest portion of the government expense, and hasn’t realized large-scale savings.
The two opinions are an interesting point – counter point on the concept of consolidation and mergers.
From the Wall Street Journal:
Governors and lawmakers across the U.S., looking to trim the costs of local government, are prodding school districts, townships and other entities to combine into bigger jurisdictions. But a number of studies-and evidence from past consolidations-suggest such mergers rarely save money, and in many cases, they end up raising costs.
Economists who have studied the issue say there are a number of reasons why several small governments can end up costing less than a single larger government. For starters, small governments tend to have fewer professional-and higher-paid-employees, such as lawyers. Studies show small governments generally rely more on part-time workers, who receive fewer long-term benefits such as pensions and health-care coverage.
Read the full article here.