By M. Scott Sotebeer, PhD
Do states that are proactively engaged in supporting, enabling, and otherwise helping or trying to initiate local consolidation or similar measures also have a mechanism for sanctions for non-performance or lack of participation? The short answer is yes.
State legislative decisions to reduce program funding for locals may be the simplest form of sanction or forced change. Several states have an aggressive stance regarding their budget crisis, using a “carrot-and-stick” methodology. - There are successes and failures through these various mechanisms designed to change the fundamentals of local government.
The State of Michigan has one of the more aggressive strategies for tough decision-making that drive incentives and sanctions for troubled local governments. Much has been written about Michigan’s Public Law 4 (repealed by voters this past November and re-configured in another bill, PA 436). In summary, the state had the power to insert an Emergency Financial Manager (EFM) into municipalities and school districts in serious financial trouble. Options under the revised law provide a measure of latitude, affording local decision-makers choices that may include voluntary Chapter 9 bankruptcy, choosing an EFM, agreeing to mediation, or accepting a consent agreement.
Michigan has service-level and government unit-level consolidation incentives in place to push consolidations and other shared-service arrangements. The original emergency financial manager law, as a last-resort measure, supposes to help localities balance the books and get their government or school district back on its feet. It is, however, a highly volatile and controversial practice.
The program has its origins in 1988 Michigan emergency management legislation. The current law may go back even further, with roots in New York City’s 1975 Municipal Assistance Corporation, set up to pull the city out of a spiraling debt crisis. Regardless of origin, the newly overhauled Michigan law has been the subject of intense in-state disagreement, lawsuits, and public and federal-level scrutiny. Other states have laws providing for emergency financial management, but none reported to operate with the same authority or scope as Michigan.
Other “sticks” available to states include:
· New Jersey formed the Local Unit Alignment, Reorganization, and Consolidation Commission, which has the authority to administer grants and aid to help promote shared-service and consolidation plans. The state tied direct aid to local government efficiency plans and performance measures.
· Maine enacted a massive restructuring program for schools designed to improve quality of service with the goal of cutting school districts from 290 to not more than 80. Failure to adopt a reorganization plan could earn sanctions of up to 50- percent reductions in state aid streams and cuts to building programs. The state followed similar paths to reduce jail and prison problems and to slash the number of 911 call centers from 48 to 16. Communities that did not participate risked the loss of state funding.
· Indiana’s Commission on Local Government Reform advanced direct measures to restructure the 2,730 various units of government with property-taxing authority. The state assembly used property-tax reform legislation in order to transfer and thus consolidate several local levels of property-taxing authority to larger jurisdictions such as counties. The legislative maneuver in effect eliminated some junior taxing districts, such as township assessors, EMS, and fire districts.
Pennsylvania, Ohio, and other states have followed a similar path that many attribute to New York’s early efforts to reform state and local government through carrot-and-stick strategies. The common theme is that all of these states have taken a variety of aggressive actions to drive change. And, similarly, their reform efforts have carrots: from grants to technical assistance and permanent state and regional advisory groups, commissions, and regional authorities. Underlying their efforts is a serious focus on and commitment to meaningful reform through consolidations and other measures that result in cost savings, efficiency gains, and improved service.
For more information about Michigan’s PA 436:
> Resources
> Detroit News
Do states that are proactively engaged in supporting, enabling, and otherwise helping or trying to initiate local consolidation or similar measures also have a mechanism for sanctions for non-performance or lack of participation? The short answer is yes.
State legislative decisions to reduce program funding for locals may be the simplest form of sanction or forced change. Several states have an aggressive stance regarding their budget crisis, using a “carrot-and-stick” methodology. - There are successes and failures through these various mechanisms designed to change the fundamentals of local government.
The State of Michigan has one of the more aggressive strategies for tough decision-making that drive incentives and sanctions for troubled local governments. Much has been written about Michigan’s Public Law 4 (repealed by voters this past November and re-configured in another bill, PA 436). In summary, the state had the power to insert an Emergency Financial Manager (EFM) into municipalities and school districts in serious financial trouble. Options under the revised law provide a measure of latitude, affording local decision-makers choices that may include voluntary Chapter 9 bankruptcy, choosing an EFM, agreeing to mediation, or accepting a consent agreement.
Michigan has service-level and government unit-level consolidation incentives in place to push consolidations and other shared-service arrangements. The original emergency financial manager law, as a last-resort measure, supposes to help localities balance the books and get their government or school district back on its feet. It is, however, a highly volatile and controversial practice.
The program has its origins in 1988 Michigan emergency management legislation. The current law may go back even further, with roots in New York City’s 1975 Municipal Assistance Corporation, set up to pull the city out of a spiraling debt crisis. Regardless of origin, the newly overhauled Michigan law has been the subject of intense in-state disagreement, lawsuits, and public and federal-level scrutiny. Other states have laws providing for emergency financial management, but none reported to operate with the same authority or scope as Michigan.
Other “sticks” available to states include:
· New Jersey formed the Local Unit Alignment, Reorganization, and Consolidation Commission, which has the authority to administer grants and aid to help promote shared-service and consolidation plans. The state tied direct aid to local government efficiency plans and performance measures.
· Maine enacted a massive restructuring program for schools designed to improve quality of service with the goal of cutting school districts from 290 to not more than 80. Failure to adopt a reorganization plan could earn sanctions of up to 50- percent reductions in state aid streams and cuts to building programs. The state followed similar paths to reduce jail and prison problems and to slash the number of 911 call centers from 48 to 16. Communities that did not participate risked the loss of state funding.
· Indiana’s Commission on Local Government Reform advanced direct measures to restructure the 2,730 various units of government with property-taxing authority. The state assembly used property-tax reform legislation in order to transfer and thus consolidate several local levels of property-taxing authority to larger jurisdictions such as counties. The legislative maneuver in effect eliminated some junior taxing districts, such as township assessors, EMS, and fire districts.
Pennsylvania, Ohio, and other states have followed a similar path that many attribute to New York’s early efforts to reform state and local government through carrot-and-stick strategies. The common theme is that all of these states have taken a variety of aggressive actions to drive change. And, similarly, their reform efforts have carrots: from grants to technical assistance and permanent state and regional advisory groups, commissions, and regional authorities. Underlying their efforts is a serious focus on and commitment to meaningful reform through consolidations and other measures that result in cost savings, efficiency gains, and improved service.
For more information about Michigan’s PA 436:
> Resources
> Detroit News
