The Price of Nice

by Jennifer Bradley | September 1, 2010

How much are Ohio’s state leaders willing to sacrifice to be nice?

The state’s commission on local government reform and collaboration is obligated to release a report today that will recommend eminently reasonable steps the state could take to nudge Ohio’s 3,800 local governments (including 250 cities, 695 villages, and 1,308 townships) along the path of greater collaboration and cost-saving shared services. While the report may not be online yet (check the link to the commission page), a draft of unanimous recommendations has been circulating throughout the state for the last month.

There’s nothing exactly wrong with these recommendations (some are very similar to ones my colleagues and I put forth earlier this year). A handful are quite good, such as putting the brakes on the practice of one municipality using tax breaks to poach a business from a neighboring town--or, to put it another way, the practice of companies playing desperate municipalities against each other to minimize their own tax payments.

But report is, in the words of one of the commission’s co-chairs, “reform light.”  The Greater Ohio Policy center called it “a modest first step.” In 2005, or 2007, modesty might have been the best policy. Now, though, the state is staring at a biennial budget gap of approximately $8 billion. The state’s revenue sharing program transfers about $1 billion back to local governments. This is not the time for eminently reasonable steps and nips and tucks to the status quo. It is time for the state to do things that are actually aggressive and disruptive, and not necessarily nice.

Reading the report, it’s clear how much local governments in Ohio are truly creatures of the state. State law, for example, explicitly allows some kinds of shared services arrangements (for firefighting) between some kinds of local governments (townships, for example), but not other kinds of agreements (for police) between other kinds of local governments (municipalities and townships, which are legally different entities), except in special circumstances. If it’s hard to parse that sentence, imagine how much harder it is to make sense of the Ohio Revised Code.

State law also mandates that each county has to have its own coroner, sheriff, prosecutor, transit, and solid waste services, among others, even if it would make more sense to consolidate those services at the metropolitan (multi-county) level.  The commission recommends changing state law to allow more shared services and more multi-county services.

So the state has to take the lead in opening up paths for those local governments that want to do more to work together and save money on local service delivery in the process. But the state also needs to do more to move along local governments that aren’t particularly interested in changing time-honored ways of doing things and forgetting useless turf battles and collaboration and shared service delivery, and that’s where it needs to get tough.

For example, rather than making a 10 percent cut in the $1 billion revenue sharing stream (comparable to the cuts that state agencies are being asked to prepare for) that local governments get as a matter of course, the state should attach some cost-cutting strings. Localities that can show that they are saving money by working together should get bigger grants (or endure smaller cuts) than those that won’t change.

One compelling idea (scroll to p. 23) would be to phase out the revenue sharing program entirely and replace it with thousands of good-sized grants that help localities plan and implement cost-saving collaborations. The Center for Community Solutions says this could shave more than half a billion dollars from the state budget. The local government commission considered this idea, but couldn’t rally the votes to recommend it (it’s in the limbo of “concepts for consideration” at the back of the report, along with other aggressive ideas).

Local governments wouldn’t like this hard shove. They would probably point out that they are under fiscal stress themselves, and that it’s too much to ask them to make big, fast changes. They may complain about the state overreaching. But now is exactly the time to make those kinds of changes, and for Ohio’s state leaders to recognize that nice is just too expensive.

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