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July 2, 2014
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Recent Legislative Action on Local Government Consolidation

UPDATE:  House Bill 5785 was signed into law on August 18, 2014.
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Historical context of special districts in Illinois

Illinois has between 7,000 and 8,500 units of local government, according to estimates by the U.S. Census and State. This is a byproduct of the Illinois Constitution of 1870, which placed severe restrictions on the borrowing and spending powers of local governments.  Illinois experienced substantial population growth during the 20th Century, and communities soon required more public services than governments could fund under these restrictions.  In response, state lawmakers authorized the creation of special districts by severing services from overwhelmed counties, municipalities, and townships.  These special districts allow communities to satisfy the state's expenditure and debt limits while still fulfilling the growing demand for services.  The services they provide include fire protection, water treatment, parks, and mosquito abatement.  Consequently, there may be a dozen of different units of government providing services in a given community.  While the Illinois Constitution of 1970 alleviated local government debt and expenditure limits, the General Assembly failed to provide the legal means for current special districts to consolidate or dissolve. 
 
As government agencies, special districts are subject to public accountability mechanisms.  Most local governments must perform their own audits and financial reporting.  This can be a demanding task for smaller special districts with limited resources, and at the expense of transparency and accountability, a number of local governments have not succeeded in fulfilling these financial requirements.  These special districts often have elected boards as well.  This government structure generally increases accountability as officials are beholden to their constituents, but the elections for these positions traditionally have poor voter turnout as they do not occur on general election days.  
 
Some view the large number of special districts as an opportunity for local governments to save costs.  Duplication in services provided has been a common discussion point, but in a given jurisdiction, special districts and other local governments typically do not offer the same public services.  By eliminating the special districts, financial responsibility would simply be transferred to the new government charged with providing the service.  Despite this, there may be an opportunity for some cost savings as the larger, receiving government will likely have greater administrative capacity and resources for providing services.  Furthermore, enhanced oversight and auditing by the receiving government could augment public accountability.
 

Local Government Consolidation Commission

The Local Government Consolidation Commission Act of 2011 created a commission to investigate the structure of local governments in Illinois.  The 17-member board met between 2012-13 and delivered their findings and recommendations in a final report.  The commission found that lowering the number of local governments units does not necessarily result in a reduction in costs to the taxpayer, and that cooperation and consolidation of local governments must be approached on a case-by-case basis.   Based on these findings, the commission proposed six recommendations that focus on eliminating barriers to consolidation and resolving certain discrepancies in the Illinois statutes governing local governments and special districts:
 
  • Identify differences between potentially duplicative units of government.  County Historical Museum Districts and Museum Districts are identified as one example for consolidation or shared services.

  • Examine districts with policing powers.  Multiple units of government, such as some forest preserve districts and airport authorities, have the authority to maintain their own police force.  An investigation should identify which entities utilize this power and which contract out their services.

  • Merge library districts.  The Illinois General Assembly should amend the Public Library District Act of 1991 to eliminate barriers to consolidation of library districts.

  • Standardize sanitary district statutes.  Five statutes currently regulate sanitation districts; these should be standardized to allow for better oversight by the state.

  • Amend statutes to enable the dissolution of districts and authorities.  Sixteen statutes should be amended to allow for the dissolution, annexation, and disconnection of special districts.  House Bill 5785 is modeled after this recommendation.  

  • Study the DuPage County Pilot Program.  Illinois should review DuPage County's progress with local government consolidation to develop a model for future local government action.  In particular, the state should provide resources to local governments that wish to explore improving efficiency through consolidation.  The County recently received an award from the National Association of Counties for its efforts. 

House Bill 5785

House Bill 5785 provides a formal process for several types of special districts to be consolidated with overlapping units of government.  The enrolled bill would allow these special districts to undertake vertical consolidation with a county, a contiguous municipality, or other contiguous special district.  The bill would require special districts pursuing dissolution to have a majority vote by both the dissolving government and the receiving government.  On the effective date of the dissolution, the receiving government would assume all responsibilities and employees of the dissolving special district.  
 
The bill would apply to Cemetery Maintenance, Civic Center, Public Health, Tuberculosis Sanitarium, County Historical Museum, Museum, Illinois International Port Authority, Solid Waste Disposal, Street Light, Surface Water Protection, Water Service, Water Authority, and Water Commission districts.  As a result, a total of 40 special districts in northeastern Illinois would be eligible for consolidation.  Most of these districts are relatively small and have low property tax rates, although some, like Civic Center and Water Commission districts, rely primarily on user fees.  The following chart provides an overview of these districts in the CMAP region.  
Local governments eligible for consolidation under House Bill 5785 in the CMAP region
Special district type Number of districts
in CMAP region
Civic Center 19
Street Lighting 6
Solid Waste Disposal 5
Cemetary Maintenance 2
Public Health 2
Surface Water Protection 2
Illinois International Port Authority 1
Water Authority 1
Water Commission 1
Water Service 1
County Historical Museum 0
Museum 0
Tuberculosis Sanitarium 0
Source:  Chicago Metropolitan Agency for Planning analysis of data from the Civic Center Code, 70 ILCS 200, and the Illinois Department of Revenue, 2012.

Pursuing coordinated investments

GO TO 2040 recommends that local governments should explore ways to coordinate or consolidate services through collaborative and responsible decision making.  Both horizontal (between non-overlapping units of government) and vertical (between overlapping units of government) service consolidation should be considered. It is important to note that there is no standard or optimal form of local governments because each community has its own unique challenges.

It is imperative to ensure that local governments maintain the ability to solve problems with innovative solutions and integrate intergovernmental collaboration into their decision-making processes.  House Bill 5785 would allow flexible accommodations for these unique challenges by enabling special districts to consolidate into counties, municipalities, and other special districts.  Future legislation could include townships (which may have boundaries contiguous with special districts) in the list of eligible receiving governments and allow multiple receiving governments to take over a special district, as well as provide other flexible local government consolidation strategies. 

Local governments should continue to evaluate the potential consolidation of local services in metropolitan Chicago, and the implementation of recommendations from the Local Government Consolidation Commission by the Illinois General Assembly will help facilitate this process through legislation.  Some local governments in northeastern Illinois, like DuPage County, are already investigating consolidation, and these efforts are explored in a subsequent Policy Update.  


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