Local Government Consolidation – The Value of Downsizing

Consolidating local government departments is one of the trickiest subjects facing local leaders. As municipalities emerge from the recent recession, budget conditions may no longer force seismic shifts in structure, but consolidation and streamlining continue to be a discussion as cities begin their budget season.

Consolidations became more of a regular topic of conversation and less of a taboo during the last few years. Some conversations – such as those in Chico – are attempts to stave off further financial troubles. Others arise from departmental insolvency and crisis.

In Santa Ana, the 128-year history of the fire department ended in 2012 as City officials and labor leaders both agreed to a plan that would transfer responsibilities to the Orange County Fire Authority. Facing a $30 million deficit and $10 million in ongoing expenses, the City was working with its labor partners to find sufficient cuts to protect its stand-alone department. However, both sides recognized that by contracting services with the OCFA, more jobs could be protected while the City could receive the cost-savings it required.

The value in the move can be found on the City’s balance sheets, while the cost was born by the memory of the 128-year old institution.

Even consolidating inside of a single agency can be achieved. Certain cities have pursued consolidating the administrative structure of several departments into one, limiting the number of high-level administrators necessary to operate.

In Chico, city manager Brian Nakamura presented his plan for “right-sizing” the city’s government structure and reducing the number of departments from 12 to five. It ruffled feathers of employees, caught some city officials off-guard, and made headlines in the northern California community for weeks. However, his plan was the result of council direction when he was hired. They wanted to reassess how the city operates in an attempt to overcome structural shortfalls.

In the more extreme circumstances, entire agencies merge. As pointed out recently, in the Bay Area there are 9 different transportation authorities managing separate systems. The Alameda County Transportation Commission, a JPA, formed out of two agencies with similar missions.

“Both agencies were involved in transportation programming and project delivery as well as advocacy related to transportation and mobility,” reads the FAQ section of the ACTC’s website. “The merger built on the success of the two agencies while saving tax dollars by eliminating redundancies and streamlining administrative processes.”

Some have been long advocates for consolidating municipal services or even municipalities. Fred Smoller, who has written on PublicCEO in the past about the need for consolidated structures, continues to advocate for less government.

“The problem isn’t that local government is too big; instead, the problem is that we have too many top heavy local governments,” writes Smoller in an article dated September 7, 2011. “As Yorba Linda City Councilman John Anderson said at a recent council meeting, “The future of municipal services is not diversification but consolidation.”

However, even small consolidations can face large opposition from the labor organizations that represent impacted employees. And with jobs on the line, the pain of consolidation can have a human face and name, making the decision to move ahead with mergers extremely difficult.

PublicCEO intends to investigate how to minimize the outcry or limit the pain that can arise from consolidations – both large and small.

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