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October 20, 2014

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GOVERNMENT:

Why consolidating city and county governments isn’t a silver bullet for waste

Combining Las Vegas and Clark County, some say, would save a bundle of money and maximize efficiency. But studies of similar mergers show such goals often aren’t met.

Las Vegas Mayor Oscar Goodman was in an expansive mood.

Having castigated the state’s most powerful union, demanded an apology from the president of the United States and declared the Las Vegas economy saved, Goodman, standing behind the podium at last month’s Chamber of Commerce luncheon, was asked about CityCenter, the massive resort, casino and condo development being built on the Strip.

Alas, Goodman said, the Strip is outside his jurisdiction — for now.

“Someday there will be consolidation,” Goodman said. “And then I will be mayor of everything.”

Merging Clark County with Las Vegas has been a pet cause of Goodman’s for years — one shared by his predecessor Jan Jones. Now, as elected officials throughout Clark County grapple with budget deficits and shortfalls, Goodman is again asking the simple question: Would one government be better than two — or, in the case of the Las Vegas Valley, five? The city’s deficit — $150 million over the next five years — fuels his argument.

“The governments work smoother. You always get the best, the cream of the crop doing the work,” Goodman said in an interview. “I believe that you save money ultimately. You cut out the upper tier of management, which is now duplicated from place to place.”

Local governments across the country, under constant pressure to do more with less, explored consolidation in the 1960s and 1970s. The idea received serious consideration here in the late 1970s, as part of a good government movement, and again in the early 1990s. The arguments, regardless of jurisdiction, are always the same: efficiency, economy, equity and accountability.

On paper, it seems like a grand idea, a silver-bullet cure for bloated bureaucracy.

“They should have done it 20 years ago,” Jones, who now heads government relations for Harrah’s Entertainment, said in an interview. “It’s always been about the politics. Nobody could say with a straight face that it makes sense to have a city and a county government.”

But public administration and urban policy experts say bigger isn’t necessarily better. Studies examining city-county consolidations across the country show mergers generally fail to deliver on the promises elected officials use to promote them, sometimes even resulting in increased costs and higher taxes. For that reason, among others, consolidation has become increasingly rare.

When put before voters, the measure has been overwhelmingly rejected. In the 1990s just four of 17 consolidation proposals were approved. In 2003 Louisville, Ky., merged with surrounding Jefferson County, becoming the first large-scale consolidation in more than 30 years.

“There are far less savings than people think,” said Jered Carr, a professor of public administration at Wayne State University in Michigan, who has edited a collection of studies on consolidation. “Given all the studies, I’m very skeptical of the idea that bigger works better. I’m always aware that there is just no evidence for most of what elected officials say” about consolidation.

Moreover, when consolidation has been successful, what benefits have been shown usually accrue to the political elite — a fact Goodman seems to recognize, albeit under the guise of humor.

In 1975 then-Gov. Mike O’Callaghan signed a bill folding the Strip and other urban areas of the county into the city, doubling the size of the municipality. A year later, after county offices had moved to City Hall, the Nevada Supreme Court overturned the law, calling it unconstitutional.

The Legislature tried again in 1977, putting the issue to voters the next year. Las Vegas voters said yes. County voters said no.

In the early 1990s Jones and consolidation advocates sought political cover by forming a joint task force to study a city-county merger.

A 1993 study, commissioned by the group and performed by the Ernst & Young consulting firm, showed consolidation could cost $9 million upfront but save $23 million annually. The firm examined 19 areas where the city and county duplicate services, concluding that nearly 400 positions could be cut in a merger.

City officials argued efficiency while county officials argued politics, accusing Jones and her city allies of making a power play for the Strip. The idea died, with leaders on both sides agreeing to look at consolidation of some services. But, with the exception of some regional planning efforts, those intentions did not pan out.

As the first successful consolidation of a major metropolitan area in three decades, the Louisville experience is instructive. The city of about 250,000 became part of a merged entity of 700,000.

Some background:

Louisville residents narrowly defeated a consolidation attempt in 1982, with coalitions and votes breaking along class lines — blue-collar whites and blacks banded together against a ballot measure pushed by the wealthy business community.

Urban policy experts have noted that consolidations have been attempted aimed at diluting minority influence in cities by creating expansive metropolises of mostly white suburbs.

Despite a subsequent city-county compact reconciling various tax and service issues and relative regional prosperity, the Louisville business community and the political establishment renewed their merger campaign in the late 1990s, arguing that “shaking up” the system would enhance economic development.

Advocates argued that a “big box” government could control more territory, harness additional resources and produce greater efficiencies. And yet when legislators asked those advocates, including onetime and future mayor Jerry Abramson, to substantiate their claims, they could not.

Local accounting firms produced a six-page financial report covering just 38 percent of the city and county budgets, excluding the police and fire departments. The document showed no cost savings and failed to identify significant service duplication. The firms concluded that it was “impossible to accurately predict where these benefits might arise.”

Nevertheless, consolidation advocates in Louisville continued to build a case on rhetoric. According to a National Research Council review of city-county mergers, “there is general agreement that consolidation has not reduced costs and, in fact, may have even increased total local expenditures.” Case studies of various cities, including Miami and Jacksonville, reached the same conclusion.

H.V. Savitch, an urban policy expert and research professor at the University of Louisville, co-wrote two extensive studies of the city’s merger. His conclusion: The merger failed to deliver on the key arguments used to promote it. As for efficiency, Savitch said considerable evidence existed before the merger showing a direct relationship between consolidation and increased costs.

Costs rise because the wages of lesser-paid employees are generally raised to match those of their new peers. Elected leaders tend to negotiate minimal layoffs to reduce the opposition of public employees unions. Also, mergers tend to create “tall bureaucracies,” meaning large governments with multiple layers of supervisors and middle management, Savitch said. Then there’s the argument, bolstered by research, that these larger governments do not perform any better.

“Mayors will often speak favorably about consolidation,” Savitch said. “At first blush, it seems to be a magic bullet: You avoid duplicative services, act with one vision and one voice, and stimulate the economy. But the objective evidence is either not there or contrary to these assertions. Mergers really don’t deliver.”

Savitch identified one clear winner though: Jerry Abramson, the three-term mayor of pre-merger Louisville. A major proponent of consolidation, the formerly term-limited Abramson ran for mayor of the merged jurisdiction, winning in a landslide. He’s now in the middle of his second term and, by law, could serve another.

The new government adopted a “strong mayor” system with a metro council. By design, the council is weak, with half of its 26 members running for reelection every two years. Savitch writes that the imbalance is made worse by resource allocation — the mayor has more than 60 senior staff members while each council representative has one staffer and must share a few clerical workers with the rest of the council.

Most significant, Savitch writes, was the political realignment. The merger, he says, reduced the influence of blacks in the inner city while inflating suburban power. Although the former city represents 40 percent of the region’s population, it holds only a third of the council seats. Small suburban cities and formerly unincorporated areas now dominate the council, Savitch found. And geography trumps party, with suburban Democrats and Republicans forming coalitions to redirect infrastructure projects and overall resources from the former city.

Both Savitch and Carr, the Wayne State consolidation expert, suggest local governments explore other avenues to achieve cost savings, among other things. “Governments should be asking, ‘Is consolidation the only way to get at this? Or are there five or six other (service) agreements that could work?’ ” Carr said.

Indeed, fragmented government and local competition have resulted in greater efficiency and cost savings elsewhere, said Chris Stream, a professor of public administration at UNLV who has studied consolidation efforts in Florida. “Think about government like a market,” he said. “If Henderson has to compete with Las Vegas for citizens, or vice versa, they may purposely drive down costs to attract residents.”

Bruce Woodbury, the former Republican county commissioner whose 27-year political career ended last year because of term limits, has long opposed city-county consolidation. He favored the merging of police, transportation, flood control, health, water and tourism departments, as has occurred in Clark County over the years. In the past, county officials have floated the idea of regionalizing the valley’s four housing authorities and its five fire training academies. Consolidating the county’s justice courts with the city’s municipal courts has also been discussed.

“It’s an issue of jurisdiction, power and authority,” Woodbury said of merging governments. “There’s a point to be made in cost savings, but I think it’s more theoretical than actual.”

As for Goodman, he told the chamber crowd he would seriously consider running for governor if the state’s standing didn’t improve this legislative session. Asked afterward if he would be more interested in running for mayor of a consolidated government, Goodman said: “I can’t think of anybody who would have more fun.”

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