Academic journal article Public Administration Quarterly

A Longitudinal Analysis of the Effects of Service Consolidation on Local Government Expenditures

Academic journal article Public Administration Quarterly

A Longitudinal Analysis of the Effects of Service Consolidation on Local Government Expenditures

Article excerpt

INTRODUCTION

The Great Recession of 2007-08 resulted in reductions in the public sector labor force not seen in the previous four recessions (Dadayan and Boyd, 2013). Five years following the recession, local government employment remains down 2.9 percent (compared to employment gains in three of the previous four recessions) and with limitations on tax and/or spending growth (Amiel, Stallmann and Deller, 2009) there are few resources available to add public employees. Despite these fiscal pressures, local governments are responsible for providing essential services to the public, including police and fire protection, road repairs, assessments, building inspections, etc. Politically, the fiscal gap between service demands and revenue limitations appears to be perceived as a spending problem, not a revenue problem. Local managers, administrators and policy makers continue to pursue alternative service delivery options as a means of maintaining services while also reducing costs. Unfortunately, the literature often provides either inconclusive or conflicting evidence about the extent to which alternative service options produce cost saving. In part that is due to the almost exclusive use of pre-consolidation expenditure reduction estimates citied within the existing literature (Holzer and Fry, 2011). Such estimates are often very different from the final amounts, providing a false sense of savings (Holzer and Fry, 2011).

Service consolidation and shared service agreements can take on a variety of meanings (Nunn and Rosentraub 1997, McCabe 2000, Feiock 2009, Scholz and Feiock 2010, Thurmaier and Wood 2002). According to Holzer and Fry (2011), service consolidation means "... inter-local agreements, shared services, service transfers, government partnerships, contracts with government, and many other variants" (48). For our purposes, service consolidation focuses on contractual agreements where services are either shared or transferred from one governmental unit to another, or to a newly formed unit (e.g., regional dispatch). Quite often, the driving force behind the selection of service consolidation over other forms of shared service agreements its perceived ability to reduce expenditures through personnel reductions while also retaining, or even enhancing, service quality. This paper attempts to examine the effects on spending in Wisconsin communities that use a particular form of alternative service delivery: consolidation. The panel dataset allows for: 1) comparisons of local governments that did and did not consolidate services; 2) comparisons of expenditures before and after a community consolidated a service and; 3) examination of the effects of various types of consolidated services. The paper follows with a literature review, a discussion of local finances in Wisconsin to provide context, a discussion of service consolidation in Wisconsin, methodology, results and conclusions.

LITERATURE REVIEW

Government consolidation has a long and controversial history in the U.S. (Fleischmann, 2000). It was a common strategy in the early-mid twentieth century for school districts in the United States when their numbers dropped from over 119,000 in 1938 to just over 22,000 in 1968 (Snyder, Tan and Hoffman, 2004). While never as common at the municipal level, municipal consolidation--the merging of two communities or a city and county government into one unit--dates back to 1805 when the City of New Orleans merged with its county (Duvall, 1999). Yet large scale consolidation of local governments does not have a successful history. Since the 1950's many city-county consolidations have been proposed but over 85 percent have been rejected by voters (Thurmaier and Leland, 2005). The high failure rate of city-county consolidations has led many governments to seek out its closest alternative: service consolidation.

The advantage service consolidation has over government consolidation is its ability to select those services appropriate for merging (Holzer and Fry, 2011). …

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