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October 23, 2020

Government Consolidation: A Historically Unpopular Solution to Local Fiscal Strain

In a nutshell:

  • Local government consolidation has been historically unpopular with voters, but the pandemic and financial strains facing local governments brings the issue to the forefront.
  • Michigan has a lot of local governmental units, but when it comes to government per capita, it is in the middle of the pack. Valid arguments can be made for government consolidation and for providing residents with multiple options, including small, low-service governments.
  • More governments generally means higher overall taxes to provide services, but consolidation has become a zero-sum game, pitting townships against cities. One option to address this is to focus on consolidating government services where possible rather than units of government.

A recent article in Governing Magazine discusses a ballot referendum asking voters in three small, struggling towns in Illinois to consolidate to become the larger town of Cahokie Heights. Currently, Cahokie, Centreville, and Alorton are facing fiscal distress and crumbling infrastructure and are placing their hopes on voters to allow for a larger, consolidated government that may be better able to obtain financial and other types of assistance from the county, state, and federal governments.

Local government consolidation has been a popular talking point as a solution to fiscal problems  in Michigan and other states, but rarely do citizens see any action on this front. While few consolidation attempts have been successful in the past, the current pandemic and the financial strains facing local governments make the issue ripe for consideration again.

How much is too much?

Michigan state and local governmental systems were designed in the 1800s when methods of communication and transportation were drastically different. Back then, the county seat was considered a far trip and government functions such as elections, property assessing, and tax collection were performed by townships or small cities. 

Times have changed and technological advances have made communication with government agencies and transportation across the state much easier, raising the question of if we still need so many small, local governments.

If the local government system were created today, it is likely that it would not be designed similar to what currently exists. Rather, many local functions would be given to the counties or some other form of regional government to capture economies of scale in the provision of services. Of course, it is much easier to start from scratch than to reform a system that has been in place for 200 years. It is clear that bigger isn’t always better and people are attached to their local governments. Change is hard, even if it can lead to reduced tax rates.

While Michigan has an abundance of local governments, it is not alone. The table below highlights the top five states with the most local governments per capita, the bottom five with the least, and the five around Michigan in the middle. Michigan ranks 14th nationally in the total number of governmental units. However, Michigan’s rank of governments per capita is much lower at 29th. In fact, Michigan ranks very close to the national average.

Table: Total Local Governments in Select States

Total Governments (less school districts)State Population, 2019Governments Per Capita (per 100,000 residents)
North Dakota2,485762,062326.1
South Dakota1,766884,659199.6
Wyoming739578,759127.7
Kansas3,4862,913,000119.7
Nebraska2,2691,934,000117.3
Kentucky1,1494,468,00025.7
Alaska179731,54524.5
Michigan2,2929,987,00022.9
Alabama1,0584,903,00021.6
Washington1,6057,615,00021.1
Virginia5168,536,0006.0
Arizona4167,279,0005.7
Maryland3446,046,0005.7
Nevada1723,080,0005.6
Hawaii211,416,0001.5
Average of all states1,5466,550,73623.6
Source: U.S. Census of Governments, 2017 data

Arguments for and against consolidation

Like most issues, government consolidation has valid arguments both for and against it. The Governing article focuses on Illinois, which has lots of local government with a large number of townships, many without a lot of service responsibility. This fact leads the author of the article to suggest that a state-level effort to get rid of unnecessary governments would help the three struggling municipalities, as well as many others throughout the state. A series of commissions and studies in Illinois have come to the same conclusion, but little has been done to consolidate governments.

Like Illinois, Michigan has a plethora of small governmental units, including over 250 villages and 1,200 townships. While some townships provide a bare level of service, others, such as urban townships, resemble medium or large-sized cities. Michigan’s villages are typically about one square mile in size and the median village serves less than 1,000 residents. Not all governments are created equal and the answer is not to just get rid of all of one type of government. That being said, what is the argument for keeping small, low-service governments, regardless of what they are called?

Some would argue that they do not want a one-size-fits-all government and many local units of various sizes and service abilities give residents more choices. This is true, but then residents must accept that operating these units will require higher taxes. Having many local units encourages urban sprawl and raises the overall cost of government. Townships that used to serve farms and small communities are now full-service governments. 

The redundancies in service providers across older established communities and fringe townships serving recently established subdivisions was a major takeaway when we looked closely at Lenawee County in a report a few years back. The report identified three ways to streamline the delivery of local government services: 1) local government consolidation, 2) city and county consolidation, or 3) intergovernmental collaboration. It recommended that Lenawee County governments concentrate on intergovernmental collaboration as a means of gaining the benefits of local government consolidation without surrendering their identities and independence. 

Previous merger and consolidation attempts

Over the years, most local government merger proposals, with the goal of combining services to save money, have not been successful at the ballot box. Those that have been successful (for example, Louisville merging with Jefferson County, Kentucky, in 2000) have made the pitch that a larger polity will stimulate a new feeling of pride and a sense of local importance rather than focusing on the money-saving argument.

When mergers have happened, they have been money-saving and bureaucratic successes. Regardless of this, local voters seem to be afraid of supporting local mergers; the fears seem to be rooted in the loss of identity and local control. Surprisingly enough, the early to mid-1900s saw the consolidation of schools and local districts across rural America (including Michigan). It might be hard to believe today, as people tend to be very attached to their local schools (Go Wildcats!), but Michigan reduced the number of autonomous local school districts from over 7,000 in the 1910s to over 900 today (including charter schools). Many of these schools were so small that their continuation was hard to justify in financial terms; plus, consolidation brought with it, in many cases, access to more and higher-quality services.

The lesson that we can take from school consolidations in the 1900s is that government can be successfully consolidated when it is clear to ordinary citizens that they will be better off in the new arrangement. The hard part is making it clear to citizens that consolidation will improve the current provision of services, not simply lower taxes..

One of the few recent successes in Michigan, the consolidation of Battle Creek city and township in 1982 happened because the Kellogg Company threatened to leave the community unless changes were made. In 2000, the cities of Stambaugh and Iron River and the village of Mineral Hills in the Upper Peninsula voted to consolidate for many of the same reasons the Illinois communities are struggling with today. Other more recent examples have not been successful – proposed consolidations of Grand Blanc city and township in Genesee County, Spring Lake village and township in Ottawa county, and Onekema village and township in Manistee County all failed. 

Government consolidation in Michigan can be a zero-sum game pitting townships against cities. That is why we have focused recent reports on consolidating services, not governments. Our 2017 report, Counties in Michigan: An Exercise in Regional Governance, highlights how many services can be consolidated at the county level without residents having to give up their local government identity.

Research Associate

About The Author

Jill Roof

Research Associate

Government Consolidation: A Historically Unpopular Solution to Local Fiscal Strain

In a nutshell:

  • Local government consolidation has been historically unpopular with voters, but the pandemic and financial strains facing local governments brings the issue to the forefront.
  • Michigan has a lot of local governmental units, but when it comes to government per capita, it is in the middle of the pack. Valid arguments can be made for government consolidation and for providing residents with multiple options, including small, low-service governments.
  • More governments generally means higher overall taxes to provide services, but consolidation has become a zero-sum game, pitting townships against cities. One option to address this is to focus on consolidating government services where possible rather than units of government.

A recent article in Governing Magazine discusses a ballot referendum asking voters in three small, struggling towns in Illinois to consolidate to become the larger town of Cahokie Heights. Currently, Cahokie, Centreville, and Alorton are facing fiscal distress and crumbling infrastructure and are placing their hopes on voters to allow for a larger, consolidated government that may be better able to obtain financial and other types of assistance from the county, state, and federal governments.

Local government consolidation has been a popular talking point as a solution to fiscal problems  in Michigan and other states, but rarely do citizens see any action on this front. While few consolidation attempts have been successful in the past, the current pandemic and the financial strains facing local governments make the issue ripe for consideration again.

How much is too much?

Michigan state and local governmental systems were designed in the 1800s when methods of communication and transportation were drastically different. Back then, the county seat was considered a far trip and government functions such as elections, property assessing, and tax collection were performed by townships or small cities. 

Times have changed and technological advances have made communication with government agencies and transportation across the state much easier, raising the question of if we still need so many small, local governments.

If the local government system were created today, it is likely that it would not be designed similar to what currently exists. Rather, many local functions would be given to the counties or some other form of regional government to capture economies of scale in the provision of services. Of course, it is much easier to start from scratch than to reform a system that has been in place for 200 years. It is clear that bigger isn’t always better and people are attached to their local governments. Change is hard, even if it can lead to reduced tax rates.

While Michigan has an abundance of local governments, it is not alone. The table below highlights the top five states with the most local governments per capita, the bottom five with the least, and the five around Michigan in the middle. Michigan ranks 14th nationally in the total number of governmental units. However, Michigan’s rank of governments per capita is much lower at 29th. In fact, Michigan ranks very close to the national average.

Table: Total Local Governments in Select States

Total Governments (less school districts)State Population, 2019Governments Per Capita (per 100,000 residents)
North Dakota2,485762,062326.1
South Dakota1,766884,659199.6
Wyoming739578,759127.7
Kansas3,4862,913,000119.7
Nebraska2,2691,934,000117.3
Kentucky1,1494,468,00025.7
Alaska179731,54524.5
Michigan2,2929,987,00022.9
Alabama1,0584,903,00021.6
Washington1,6057,615,00021.1
Virginia5168,536,0006.0
Arizona4167,279,0005.7
Maryland3446,046,0005.7
Nevada1723,080,0005.6
Hawaii211,416,0001.5
Average of all states1,5466,550,73623.6
Source: U.S. Census of Governments, 2017 data

Arguments for and against consolidation

Like most issues, government consolidation has valid arguments both for and against it. The Governing article focuses on Illinois, which has lots of local government with a large number of townships, many without a lot of service responsibility. This fact leads the author of the article to suggest that a state-level effort to get rid of unnecessary governments would help the three struggling municipalities, as well as many others throughout the state. A series of commissions and studies in Illinois have come to the same conclusion, but little has been done to consolidate governments.

Like Illinois, Michigan has a plethora of small governmental units, including over 250 villages and 1,200 townships. While some townships provide a bare level of service, others, such as urban townships, resemble medium or large-sized cities. Michigan’s villages are typically about one square mile in size and the median village serves less than 1,000 residents. Not all governments are created equal and the answer is not to just get rid of all of one type of government. That being said, what is the argument for keeping small, low-service governments, regardless of what they are called?

Some would argue that they do not want a one-size-fits-all government and many local units of various sizes and service abilities give residents more choices. This is true, but then residents must accept that operating these units will require higher taxes. Having many local units encourages urban sprawl and raises the overall cost of government. Townships that used to serve farms and small communities are now full-service governments. 

The redundancies in service providers across older established communities and fringe townships serving recently established subdivisions was a major takeaway when we looked closely at Lenawee County in a report a few years back. The report identified three ways to streamline the delivery of local government services: 1) local government consolidation, 2) city and county consolidation, or 3) intergovernmental collaboration. It recommended that Lenawee County governments concentrate on intergovernmental collaboration as a means of gaining the benefits of local government consolidation without surrendering their identities and independence. 

Previous merger and consolidation attempts

Over the years, most local government merger proposals, with the goal of combining services to save money, have not been successful at the ballot box. Those that have been successful (for example, Louisville merging with Jefferson County, Kentucky, in 2000) have made the pitch that a larger polity will stimulate a new feeling of pride and a sense of local importance rather than focusing on the money-saving argument.

When mergers have happened, they have been money-saving and bureaucratic successes. Regardless of this, local voters seem to be afraid of supporting local mergers; the fears seem to be rooted in the loss of identity and local control. Surprisingly enough, the early to mid-1900s saw the consolidation of schools and local districts across rural America (including Michigan). It might be hard to believe today, as people tend to be very attached to their local schools (Go Wildcats!), but Michigan reduced the number of autonomous local school districts from over 7,000 in the 1910s to over 900 today (including charter schools). Many of these schools were so small that their continuation was hard to justify in financial terms; plus, consolidation brought with it, in many cases, access to more and higher-quality services.

The lesson that we can take from school consolidations in the 1900s is that government can be successfully consolidated when it is clear to ordinary citizens that they will be better off in the new arrangement. The hard part is making it clear to citizens that consolidation will improve the current provision of services, not simply lower taxes..

One of the few recent successes in Michigan, the consolidation of Battle Creek city and township in 1982 happened because the Kellogg Company threatened to leave the community unless changes were made. In 2000, the cities of Stambaugh and Iron River and the village of Mineral Hills in the Upper Peninsula voted to consolidate for many of the same reasons the Illinois communities are struggling with today. Other more recent examples have not been successful – proposed consolidations of Grand Blanc city and township in Genesee County, Spring Lake village and township in Ottawa county, and Onekema village and township in Manistee County all failed. 

Government consolidation in Michigan can be a zero-sum game pitting townships against cities. That is why we have focused recent reports on consolidating services, not governments. Our 2017 report, Counties in Michigan: An Exercise in Regional Governance, highlights how many services can be consolidated at the county level without residents having to give up their local government identity.

Research Associate

About The Author

Jill Roof

Research Associate

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