Recommendation
Encourage partnerships and consolidation

The region’s local governments face extensive revenue constraints, with decreasing state and federal support as well as limited willingness to raise local taxes and fees. Many communities have a backlog of infrastructure needs, or have left some staff positions vacant. In short, governments must do more with less. Sharing services, consolidating services, or consolidating governments can provide benefits, including improved capacity and resources, greater efficiency, enhanced service quality, and cost savings. Such partnerships can also allow communities access to professional staff and services that provide a higher quality of service than smaller governments could provide on their own, while some create savings that allow local governments to reduce costs or fund critical staff positions. The benefits depend on local context, which must be explored when considering new opportunities.

Northeastern Illinois has long had a culture of service sharing and partnership between local governments. Many governments, including counties, townships, municipalities, school districts, and special districts, have found ways to share the cost of services or purchases, or in some cases, to consolidate units of local government. Joint purchasing in particular has grown across the region as more governments understand its benefits.

Local governments that lack the resources to analyze needs, find potential partnerships, or develop shared services can benefit from technical assistance. In 2015, for example, the Villages of Oswego and Montgomery and the United City of Yorkville worked through CMAP’s LTA program to identify opportunities for service sharing and developed a new Lower Fox River Partnering Initiative, which oversees long-term cooperation among the communities and has initiated a growing number of coordinated activities, including shared staff, equipment, and service provision across multiple departments.  

When many small, adjacent jurisdictions provide the same services, the result can be higher costs and lower overall capacity. Consolidating services may produce cost savings, increase capacity or efficiency, or enhance service delivery. Although less prevalent than service sharing, successful service consolidation has been implemented in multiple service areas. For example, the six south suburban Cook County communities served by the Thorn Creek Basin Sanitary District have seen significant cost savings over an extended period by consolidating sewage treatment. Municipalities with limited need for a certain service may save costs to hire, train, and manage qualified separate staff by contracting with a county to perform that function. To cite one example, Lake County delivers code enforcement and development review services on behalf of multiple municipalities.

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Jon Kindseth was tired of seeing his municipality compete with others for economic development. As village manager of Beach Park, he decided to work with his neighbors to help his community succeed. 

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Consolidation of governments can increase communities' capacity to achieve local and regional goals. Adjacent units of government, such as two fire protection districts, may be consolidated to achieve economies of scale, merge services, or combine resources or tax base. Alternatively, vertical consolidation between overlapping units of government, such as a municipality and a special district, may also improve coordination of services, reduce administrative costs, or enhance civic participation.

Consolidation depends on support of local residents and civic leaders, as well as unique local conditions. In many cases, governments are already sharing services or engaging in joint projects. Challenges occur when governments -- and their residents and businesses -- want dissimilar service levels. Also, very different tax bases or service levels can create an increased burden for property taxpayers in one of the districts. However, careful consolidation can also provide broad benefits over the long term by reducing costs, gaining efficiencies, and freeing up resources for new expertise.

The state needs additional programs and resources to implement consolidation and service sharing. In recent years, consolidating units of government has been the subject of numerous legislative efforts and task forces. 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. Yet no state programs directly fund or provide assistance for service sharing or local government consolidation. Other states around the country, such as New York, have provided technical assistance and awards to local governments to achieve cost savings and improve efficiency through cooperative agreements, mergers, consolidation, and dissolutions.

Finally, annexation of developed, but unincorporated, areas may improve services and lower costs for them. Historical development has created a patchwork of unincorporated neighborhoods in the region’s urbanized area, leaving some counties to provide these disparate developed areas with public safety and regulatory services that are typically a municipality's responsibility. The tax burden of these services is spread across all county taxpayers, regardless of whether they are located in unincorporated areas. Due to the wide geographic dispersion of these unincorporated pockets, county services for unincorporated areas may cost more than what an adjacent municipality could provide. In addition, local roads in these neighborhoods are operated and maintained by small township road districts, which are designed for providing services across a spread-out, rural grid, not to neighborhoods within municipalities. Annexing these areas may be costly, as infrastructure may not connect to or meet the standards of adjacent municipalities. For example, because many of these neighborhoods are not served by municipal water and sewer systems, they require significant upgrades to existing water, sewer, and roadway infrastructure.

The following describes strategies and associated actions to implement this recommendation.

Facilitate partnerships for service sharing and consolidation

Local governments need assistance to develop agreements for sharing or consolidating services. Facilitation efforts could include relatively informal offerings, such as forums or meetings with other communities and vendors to discuss partnership opportunities, or more formal programming, such as direct matchmaking and brokering of collaborative agreements, or assistance in developing and sharing the data needed to create partnerships.

In addition, while the State of Illinois has created statutory processes to streamline some local government consolidation, it has not funded 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. Other states have also used existing federal allowances for grants or loans, such as the IEPA’s State Revolving Fund, to support engineering, rate, and consolidation studies. This tool could be helpful for local governments exploring new water management structures and systems to relieve their capacity constraints.

Finally, local governments considering consolidation face the prospect of dissimilar service levels and/or tax bases that 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 initiatives that will result in long-term savings, tax credits could offset the resulting tax differential and ease concerns of property owners about tax increases.

Explore consolidation of governments and services

Consolidating services into a larger entity (such as a county), or a new entity, offers potential for saving costs and increasing capacity. In addition, local governments that are already sharing services, implementing infrastructure projects together, or engaging in joint contracts have proven that they are capable of working together. Where there is interest by residents and civic leaders, adjacent local governments with extensive existing partnerships, similar tax bases and services levels, or limited potential for growth may benefit from consolidating governments. Overlapping units of government -- such as municipalities, townships, or special districts with existing partnerships or complementary services -- should also consider consolidation when local interest exists.

Increased consolidation also requires action at the state level. The State has made several statutory changes over the years that allow some local governments to consolidate. However, the region requires additional statutory, programmatic, and funding resources to initiate studies and ameliorate near-term tax inequities that could prove a barrier to an otherwise beneficial consolidation.

Plan for and fund annexation of developed, unincorporated areas

In developed, unincorporated areas, many services are provided by counties, leading to inefficiencies and high costs in some areas. Encouraging the annexation of these neighborhoods and commercial districts by adjacent municipalities, however, is not without challenges. Many residents prefer to remain in an unincorporated area, in part due to differences in local regulations. In addition, many of these areas would require significant infrastructure improvements to meet municipal standards. Planning and securing funding for these infrastructure improvements is a key step in encouraging municipalities to annex these areas. Because their residents and businesses will play important decision-making roles, their concerns must be addressed in any annexation process.