State Incentives for Local Government Efficiency

States are currently in the business of promoting local government efficiency as a way to cut local government expenditures.   However, funding is a barrier for local governments that are tryting to take steps towards efficiency.  State incentive programs offer the funding that is needed for local governments to become more efficient through shared services, consolidation, dissolution, mergers, or cooperative agreements. 

The Local Government Efficiency Program in New York is a state incentive program that will provide technical assistance and competitive grants for local governments that seek to save money through consolidation, merger, dissolution, shared services, and cooperative agreements while at the same time still provide core governmental services to the community.  The grants are awarded through the LGeGrant Program which requires the municipality to go through an application process to be awarded the funding.

The Local Government Innovation Fund (LGIF) is an Ohio incentive program (click here for program policies) that will provide financial assistance to municipalities that are trying to set in place innovative and more efficient ways to deliver government services to their community.  Local governments seeking this award should be expected to describe how the plan will also improve the business environment and attract members to the community. With 45 million dollars available, 9 million for grants and 36 million for loans, the LGIF is a resource that local governments should use to implement innovative ideas.

For more information, and technical assistance, on local government consolidation, dissolution, mergers, and shared services visit the Center for Government Research, as well as, the Technical Assistance Manuel for New York’s Share Municipal Services Incentive Grant Program  prepared by the Government Law Center of Albany Law School for the New York Department of State, Division of Local Government Services.

Ohio Commission on Local Government Reform and Collaboration

The Ohio Commission on Local Government Reform and Collaboration was created in 2008 to recommend ways that the government can improve the efficiency and effectiveness of local government operations, reduce taxes, and improve economic development. 

Created by statute, the Commission is mandated to research restructuring and streamlining local governments and taxing districts, the realignment of services provided by state and local governments, reform the constitutional, statutory, and administrative laws to allow for collaboration, identify duplication of services, and to achieve cost savings for tax payers.  In their report the Commission focused on three categories of recommendations including an examination of how to incentivize local government collaboration connected to service delivery, reforming and improving the state and local tax structure, and studying the feasibility of alternative or restructured service delivery systems.

The final report describes fifteen recommendations on behalf of the Commission.  Under the umbrella of local government collaboration incentives the Commission recommends establishing a system of incentives to encourage local governments to collaborate on delivery of services, create seed funding to support start-up and transition costs associated with collaborative efforts, and incentivize municipalities to work together and use a single point of collection for income taxes. 

When seeking to reform local and state tax structures the Commission recommends altering state law to enable tax revenue sharing between local government so economic development revenue can be equitably shared within a defined region.  In addition, they recommend encouraging collaboration between the tax departments to support and incentivize projects aimed at local revenue sharing, overhaul joint economic development districts (JEDD) and zone (JEDZ) laws to make it easier for political subdivision to understand and use these tools, and to amend the Ohio Revised Code to limit the use of tax abatements for companies moving to Ohio.

Finally, while examining alternative service delivery models the Commission recommends encouraging regions to adopt regional economic development plans, create one-stop services for business and citizens, provide “home rule” legislation that will allow local governments to collaborate on service delivery, increase local government flexibility, create a clearinghouse of information for best practices and shared services, permit counties to regionalize, increase the role of Metropolitan Planning Organizations, and encourage the state library to research and store information on shared services.

Each of these recommendations is discussed in detail (with rationales and applicable research) in the Final Report available here.

Annotated Bibliography

The Commission has also provided an extensive annotated bibliography that identifies commissions and organizations (governmental and non-governmental) that conduct local government reform research in all states.  Each bibliography is organized and divided into three groups local government collaboration incentives, local and state tax structures, and service delivery models.  For each state that has reform initiatives dealing with these topics the Commission has identified the agency, report or initiative, provided a description of the reform efforts along with information to guide further research.

This bibliography is a great resource for government reform research. 

Annotated bibliography for Alabama – Indiana is available here.

Annotated bibliography for Kentucky – Wisconsin is available here.

Other subcommittee reports and drafts are available on the Ohio Commission on Local Government Reform and Collaboration website, available here.

Streamlining Local Governments in Indiana

Many States are re-examining the way local governments are structured in order to enhance efficiency and effectiveness and better confront the challenges of  fiscal stress.  For example, the Indiana Commission on Local Government Reform was created for this purpose.  The Commission’s  report on Streamlining Local Government identified the complexity and number of local governments as a concern becuase it creates financial stress and blocks the state and local government’s ability to provide core government services.  The Commission has sought to make local governments simpler, more transparent, and flexible enough to deal with changing communities.  Furthermore, the Commission seeks to reduce the amount of local governments and find a way for them to function at a highly efficient level.

To accomplish these goals the Commission recommends that Indiana counties create an accountable local government with fewer officials and from that provide more coordinated services to its residents.  It is recommended that townships shift their local responsibilities to the county level.  Schools and library districts should be large enough to provide a great education at lower costs.  Cities and towns should increase accountability and dispense with the added costs of separate elections.  Further, all local governments should seek to consolidate services.  These recommendations (and more) are discussed in more detail in the report.

The report is available here.

Michigan Townships Association: Michigan’s local government structure efficient but reforms recommended

Michigan Township Association has issued their report “Reforming Michigan’s Local Government” where they describe Michigan’s current local government structure as one of the most efficient in the nation.  However, they still suggest recommendations for reform and provide reform principles that Michigan’s local governments should adopt.  The report suggests that consolidation is not always the best answer to relieve the fiscal stress on local governments.  In fact, often times consolidation may increase the costs that are attributed to local governments.  The road blocks to consolidation include a calculation of what the correct amount of local governments may be, lack of public support for consolidation, logistical issues associated with consolidation (which may take five or more years) and the fact that consolidation may not decrease local government costs.  Also included in this report is a discussion on sharing services which describes the barriers (legal, political, and economic) associated with shared services and the incentives that may be set in place to foster shared services. 

The Association recognizes that economic development is a principle that should be facilitated by local governments encouraging them to collaborate and form regional economic strategies.  The Association notes that cities are the economic driving force within local governments and that when they are prospering it creates a ripple effect that is felt by the rural and suburban economies. With these principles in mind several suggestions were made to the Michigan state government that would enhance economic development at the grassroots (local government) level including the collaboration of key leaders in the public and private sectors to identify community assets and how to use those assets to encourage new businesses, new housing developments, and new populations.  This report concludes by noting that regional economic development is the most important challenge facing local governments and should be the focus when seeking to resolve the local fiscal crisis.

The Michigan Townships Association report is available here.