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June 9, 2017
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Considerations and Practices of Local Government Consolidation

In recent years, consolidating units of government has been the subject of several local initiatives, as well as numerous legislative efforts and task forces.  Illinois has between 6,963 and 8,516 units of local government, according to estimates by the U.S. Census and State of Illinois Comptroller.  Having so many units of government is not necessarily a problem.  When many small adjacent jurisdictions provide the same services, however, the result can be higher costs or lower overall capacity to provide services.  In addition, the presence of many overlapping units of government could result in insufficient civic participation or weak service coordination. 

Local government consolidation is one proposed solution. GO TO 2040 recommends that the region analyze the effects of consolidation as well as other local government coordination efforts, such as sharing services.  While the State of Illinois has studied local government consolidation -- and the General Assembly has approved several statutory changes that would make it easier for local governments to consolidate -- no state programs directly fund or provide assistance with local government consolidation.  This Policy Update outlines considerations for local government consolidation, summarizes recent state legislation, and describes how New York is encouraging its local governments to consolidate. 

Background

Local government units may consolidate to produce cost savings, increase efficiency, improve voter accountability, or enhance service delivery.  In particular, they can leverage consolidation efforts to increase their capacity to provide services as well as achieve local and regional goals.  Vertical consolidation between overlapping units of government, such as a municipality and a special district, may better coordinate public services, reduce administrative costs, or enhance civic participation.  Horizontal consolidation between adjacent units of government may be pursued to merge services or combine resources or tax base. 

Considerations for consolidation efforts

Local governments must consider many factors in any potential consolidation on a case-by-case basis.  This section describes some of the base-level considerations that should factor into initial conversations about a consolidation effort.  Other factors also influence the feasibility of a consolidation effort, including bonded indebtedness, variation in regulations and codes, employee benefit differences, infrastructure conditions, legal issues, and more.  The following provides a summary of several initial factors to consider. 

Local desire.  Interest in consolidating from local residents and civic leaders is important to achieve a successful consolidation effort.  For example, in 2017, local elections gave voters the opportunity to approve consolidation efforts in several parts of the region, including a merger of Naperville and Lisle township road districts. 

Extensive existing partnerships.  Local governments that are already sharing services, implementing infrastructure projects together, or engaging in joint contracts have many elements already in place, having proven that the entities are capable of working together.  Communities across the region have put an increasing emphasis on partnerships as a way to combine resources, increase efficiency, and improve service delivery.  Moving forward, some of these efforts may lead to interest in consolidation.  For example, Lisle-Woodridge and Darien-Woodridge fire protection districts have implemented an intergovernmental agreement to share staffing and resources, including consolidating their eight fire stations into seven stations for a trial period.  After completing a consolidation study, the entities decided to operate jointly because they are not ready to consolidate. 

For overlapping districts: complementary services.  Local governments that have complementary services may be able to improve programming or reduce costs by consolidating through coordinating programs.  For example, the City of Evanston was uniquely positioned to take on the responsibilities of Evanston Township, as the City already had several social service programs that could be coordinated with township general assistance programs. 

For adjacent districts:  similar tax base and services.  Neighboring local governments that have similar levels of service may gain efficiencies and resources by consolidating.  However, dissimilar service levels and/or tax bases may result in an increased property tax burden for taxpayers located in the district with lower levels of service or a higher tax base.  For example, McHenry County Board voted in 2015 against a ballot question that would have consolidated the County's 17 townships into eight.  One of the stated reasons was that differential tax bases may have resulted in a property tax increase for taxpayers in some of the townships. 

For adjacent districts:  limited potential for growth.  Built-out jurisdictions may benefit from joining forces with neighbors to combine resources and tax bases.  For example, some municipalities recently have experienced stagnant growth in their populations, local employment, or tax bases, while public investment needs have continued to grow.  Efficiencies and cost reductions realized through consolidation may help mitigate the effects of low growth.  Such consolidations also may increase a community's capacity by creating opportunities to hire staff dedicated to specific concerns, such as community development, economic development, or planning. 

Recent Illinois changes

In recent years, several changes to state statutes have made it easier to consolidate units of local government.  The 100th General Assembly approved Senate Bill 3 (S.B. 3) and House Bill 607 (H.B. 607) on May 31, 2017, which makes additional changes.  The Governor will consider signing these bills into law this summer.

S.B. 3 would expand the Local Government Reduction and Efficiency program to all counties in Illinois.  Currently, just DuPage, Lake, and McHenry counties are authorized to consolidate or dissolve certain units of local government, with Lake and McHenry having been added to the legislation in 2016 via Public Act 99-0709.  The bill also would add community mental health boards and boards established under the County Care for Persons with Developmental Disabilities Act to the program.  The bill specifies that moving forward, receiving units of government must honor the exclusive bargaining representation rights of employees working in dissolving units of government. 

The bill has several provisions that ease the consolidation process.  First, it would eliminate the requirement that a township be less than 126 square miles.  It also provides processes by which two or more adjacent townships could consolidate or a single township could split and merge into two adjacent townships.  The process would require the majority of voters in each affected township to approve a ballot referendum first passed by the affected boards.  Counties could eliminate townships countywide without also having to convert to a commission form of government, which requires a governing body of three to five at-large commissioners.  While 17 counties in the state operate this way, most other counties have a county board form of government with board member districts. 

The bill also would provide a process by which a township within a substantially coterminous municipality could dissolve and transfer to the coterminous municipality, via board resolutions and ballot referendum.  Currently, only Evanston and Belleville townships have statutory processes by which they could dissolve. 

Lastly, H.B. 607 would allow townships outside of Cook County to abolish their township road districts by ballot referendum.  Townships located in Cook County already have the authority to abolish township road districts by board resolution. 

National examples

While Illinois has improved state laws that govern local government consolidation, it has not funded state programs that would encourage the practice.  Several states, such as Michigan, New York, and Ohio, have pursued initiatives to promote and provide incentives for government consolidation by enacting legislation and awarding grants.  Efforts in New York are discussed below. 

The 2009 New York State Government Reorganization and Citizen Empowerment Act provides a procedural outline for the consolidation or dissolution of local governments.  The act affects towns, villages, special districts, special improvement districts, library districts, and others created by law.  As part of the act, a local government entity can be dissolved or terminated through a resolution from a governing body, through a local government entity in a proposed dissolution plan, or by referendum. The process by which citizens could petition for public vote on dissolving or consolidating local governments is promoted by a Citizen's Guide to Petitioning for Local Government Consolidation or Dissolution.

The act also created a competitive grant program, the Local Government Efficiency Grant Program (LGE), to provide incentives for consolidation as well as a noncompetitive grant program, the Local Government Citizens Reorganization Empowerment Grant, which also provides funding to study consolidation.  The LGE grant program provides technical assistance and awards to local governments to develop projects that achieve cost-savings and improve efficiency through cooperative agreements, mergers, consolidation, and dissolutions. More than 20 municipalities have taken advantage of the program, studying the merits of consolidation and dissolution of governmental units.  Since that act was implemented, several municipalities in New York have dissolved, including jurisdictions that received assistance from the LGE in conducting consolidation studies

Funds are also appropriated for Citizen Empowerment Tax Credits that can provide an annual aid bonus equal to 15 percent of the newly combined local government's tax levy, with a minimum 70 percent of the funding allocated for direct relief to property taxpayers.

In 2016, the Municipal Consolidation and Efficiency Competition launched to build consortiums wishing to pursue consolidation, shared services, and local government modernizations.  The consortiums compete for a $20 million award to implement consolidation and shared service plans.  During Phase I of the competition, six consortiums were awarded funds to complete a Municipal Consolidation and Efficiency Plan.  During Phase II of the competition, the consortiums will develop and be evaluated on their plans, which include consolidation or dissolution, as well as other permanent changes in governing structures such as consolidating and sharing services. 

Moving forward

As local government resources become more constrained, it will be necessary to explore ways to make the best use of them.  In particular, many northeastern Illinois communities already struggle with limited revenues and staff capacity, a trend that may be exacerbated in coming years.  In some cases, consolidation of local governments could result in better governance, reduced costs, improved service delivery, and heightened civic participation. 

Previous CMAP work has centered on shared services.  Local Technical Assistance work in Montgomery, Oswego, and Yorkville resulted in the Lower Fox River Partnering Initiative, which provides a framework for long-term collaboration for shared service and joint planning in those communities.  As part of developing ON TO 2050, CMAP is working with stakeholders across the region to explore strategies to deal with constrained local resources, including encouraging local government consolidation where locally desired and appropriate.  In fall 2017, CMAP will publish an ON TO 2050 strategy paper exploring how to help municipalities increase their capacity to provide services and achieve local and regional goals. 

One of the ON TO 2050 Alternative Futures focuses on the effect of constrained public resources. Please explore this future, attend a forum to discuss how it may affect our region, and offer feedback on strategies the region should pursue to continue to thrive. 


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