DetroitMan
Jul 29, 2007, 6:45 PM
Mergers could save suburbs money, boost services, experts say
July 29, 2007
BY ZACHARY GORCHOW and JOHN WISELY
FREE PRESS STAFF WRITERS
When the autumn leaves fall, Larae Koerber is envious of those who live on the Ferndale side of West End Street.
On Koerber's side of West End, residents must bag their leaves and take them to the curb. On the Ferndale side, the city allows residents to rake their leaves into the street where a city truck vacuums them up -- a service Hazel Park cut a few years ago to save money and keep its streets cleaner.
The lack of uniformity in services is puzzling, said Koerber, 42.
"I think it's kind of strange," she said. "We're all paying taxes."
The barrier between the cities, West End Street, is barely a dozen paces wide, but it marks a change in address and a change in service. It's one example of how fragmented boundaries in suburban Detroit create obstacles, widely different services and increased costs for residents and businesses.
Increasingly, officials are asking whether the quilt of 130 cities, townships and villages that surround Detroit is an outmoded structure, too costly in a time of government budget crises and when there is a need to think regionally.
Some experts say that the state could do with fewer municipalities.
"When you look at it rationally, there is every reason to consolidate, except that it flies in the face of emotion," said Susan Hannah, a political science professor at Indiana University-Purdue University in Fort Wayne who has studied local government mergers for years.
Hannah has studied 132 consolidation votes nationwide since 1947 and found that 23 of them were approved by voters -- a 17% success rate. She said while immediate savings are hard to identify, merged governments can be more efficient and save money in the long run.
Benefits of mergers
Michigan's economic crisis has reduced tax revenues and prompted cuts in key services -- from fewer cops to shorter library hours. As a result, local governments are eyeing consolidations of police and fire protection as never before. But going a step farther to full-fledged mergers, historically, has been taboo.
The move poses massive political and logistical hurdles, including convincing skeptical voters protective of their hometowns, some of who fear falling property values if they merge with poorer cities. Supporters say mergers streamline government and save money while critics contend they simply shift costs around and fatten middle management.
But the idea is garnering fresh attention around the state, most prominently in Farmington and Farmington Hills, where each city has asked Oakland County to fund a study on sharing services and a full-fledged merger.
Besides saving money, some officials and experts say mergers could also strengthen regional ties. They say the time has come to reconsider long-held assumptions about boundaries.
"To be able to break down the borders for the units of government and look more regionally has to be good," said Eric Lupher, who studies local government for the independent Citizens Research Council of Michigan.
One area that stands out for service duplication in a small area, experts and officials say, is southeast Oakland County where Koerber lives.
Nowhere in Michigan is there a more concentrated patchwork of communities than the 38 square miles there that contain nine cities and one township -- Berkley, Clawson, Ferndale, Hazel Park, Huntington Woods, Madison Heights, Oak Park, Pleasant Ridge, Royal Oak and Royal Oak Township.
That's 10 governments in an area about the size of a city like Livonia or most townships.
"Across the U.S., it's hard to find that much government in one place," said Eric Scorsone, codirector of the Michigan State University Extension State and Local Government Program, which studies municipal sharing and mergers.
The density of geography and population there makes merger a logical issue to examine for potential savings, Scorsone said.
These 10 municipalities spend more than $9 million combined on salaries and benefits so that most can have their own city manager or township supervisor, clerk, treasurer, fire chief, police chief and other department directors, according to records obtained by the Free Press.
"If you look at southeast Oakland, you will see a mind-boggling repetition of services," said Maxine Berman, Gov. Jennifer Granholm's point person on efforts to encourage consolidation of services between local governments.
Mixed reactions
State Senate Majority Leader Mike Bishop, R-Rochester, said that the inefficiency of having so many local governments in the tri-county area wastes money and discourages businesses from locating here.
Bryan Warmuskerken notices the inefficiencies as he drives his Capt. Kool Ice Cream truck through Ferndale. He is forced to turn around at the city limit, avoiding an identical Hazel Park neighborhood across the street. To deliver there, he'd have to return to work and pick up another truck that has a Hazel Park permit.
"This truck is only permitted in Oak Park and Ferndale," he said.
For most of the 19th Century, all but 2 square miles of where these 10 municipalities exist consisted of a single government, Royal Oak Township.
But beginning in 1891 and ending in 1955, pieces of the township incorporated and annexed land to create the present-day configuration where a little more than 0.5 square miles is all that's left of Royal Oak Township.
"Clearly the way we evolved with our corporate boundaries hasn't produced the most efficient model of delivering services," said Huntington Woods City Manager Alex Allie.
It is theoretical only -- no one has proposed the idea -- but if the 10 municipalities were to become one, it would create Michigan's third-largest city at about 192,000 people, behind only Detroit and Grand Rapids, and enable the area to decide whether it really needs nine libraries and 10 community centers, reduce other capital costs and unify their regulatory climate for business.
For many residents, the possibility of such a change is unnerving.
Worries in the wealthier communities about whether merging with poorer communities, such as Hazel Park and Royal Oak Township might bring down their property values is one concern. Another is the possibility of a tax increase for residents in the communities' with lower property taxes.
Some residents just fear the loss of their hometown.
"We'd just become one huge metropolitan suburb with no identity," said Thomas Wurdock, 77, who has lived in Royal Oak almost his entire life. "There may be some savings to it, but I just don't think it's worth it. I don't like that idea at all."
But several others voiced openness to merging their community into another if they would see tangible benefits.
Veronica Lujic, 36, an Oak Park resident said that although she's happy in the city, a merger could save money, meaning lights for her street and allowing residents to pool resources for better amenities. For example, Oak Park's community center and library are small and aging.
"With that kind of money, you can have a community center where kids can go," she said, listing off numerous additions, such as a water park. "The only reason to merge is money."
Other merger talks
Besides Farmington and Farmington Hills, merger talk is percolating between Tawas City and East Tawas, as well as East Lansing and Lansing.
It is only one component of discussions about ways to save money at the local level, a debate driven by the weak economy, which has reduced aid from the state; a tax system that constricts the ability of fully developed municipalities to increase revenue; and legacy costs agreed to years ago.
Then there are the discussions at the state level, where officials are pushing at a minimum for local governments to share services. Granholm is promising more money to governments that can show they are doing so.
One controversial bill would shift several township functions -- assessing property values, collecting property taxes and administering elections -- to county control.
Does merger equal savings?
Most of the municipal leaders in the 10 communities agree there would be some savings if they were merged into one city, although several insisted the savings would be relatively small.
But those savings could easily exceed the savings from merely sharing services, said Robert Daddow, deputy Oakland County executive, who oversees a county grant program that funds studies of consolidated services.
"Obviously, there would be" savings, Daddow said. "Administration, that's where the real bucks are."
But Daddow is a realist about it, noting the difficulties -- political and otherwise -- of merging whole units of government. He doesn't expect to see any soon.
Bishop said there are pockets of the state where residents should examine merging, especially where population is declining.
"I don't think any community can avoid the discussion on whether to consolidate or merge services in some way," he said.
A five-year study of the only modern merger in Michigan -- the 2001 consolidation of Iron River, Stambaugh and the village of Mineral Hills in the Upper Peninsula into one city, which takes the name Iron River -- showed those governments spending 10% less than what they spent on their own.
But that study by the MSU extension program also cautioned against using it as evidence of what could be saved by merging cities in urban areas because studies of other municipal mergers cast doubt on savings and the three communities are relatively small.
Others aren't so sure about the overall savings.
"I think in regards to managers, police chiefs, fire chiefs, you have some potential for savings," said Michael LaFaive, fiscal policy director for the Mackinac Center for Public Policy in Midland. "But it's a mixed bag. Every change has costs and benefits and the question is, would the marginal benefit outweigh the cost of the change?"
Generally, leaders in the 10 communities say sufficient savings can be found by expanding the number of joint services. Four of the 10 are studying whether to merge their fire departments and two might discuss consolidating public safety departments.
Substantial sharing of services already exists among the communities.
There's a water authority in which five participate, mutual aid pacts in emergencies and a joint garbage and recycling authority to which eight belong. Most residents can use any of the nine libraries in the communities, some share animal control and others' pool rec teams to have enough squads for a league.
Hazel Park City Manager Ed Klobucher said that merging communities is extremely difficult because each has its own retirement system, debt, ordinances and labor contracts.
More middle management would be needed even as top administrators were wiped out, Klobucher said.
"That's kind of the illusion: 'We're only going to have one chief of police. We're only going to have one fire chief,' " he said, citing supporters' arguments. "But then you would have maybe two assistant chiefs."
Ferndale City Manager Robert Bruner said merging cities is a short-term solution to the long-term troubles facing municipal governments, which, once fully developed, become severely limited in their ability to grow their tax base.
"I think there may be some value in that in some places, but if bigger was always better, then the city of Detroit would be the most financially stable community in the state, and that's obviously not the case," he said. "I don't think it is the silver bullet that is going to save Michigan or some communities."
Combining services, like the proposed fire merger, makes sense because they can be tailored to fit a need, Bruner said.
Experts agree that the best opportunities for savings come from pooling on services that are equipment-intensive, such as fire and water, or on services that require highly educated and expensive personnel, such as assessing and engineering.
Scorsone said Iron River's merger succeeded, in part, because momentum built locally instead of having it forced.
"It's a question that has to be answered on a region by region basis," he said.
Contact ZACHARY GORCHOW at 313-223-4536 or zgorchow@freepress.com. Contact JOHN WISELY at 248-351-3696 or jwisely@freepress.com.
http://www.freep.com/apps/pbcs.dll/article?AID=/20070729/NEWS05/707290583
July 29, 2007
BY ZACHARY GORCHOW and JOHN WISELY
FREE PRESS STAFF WRITERS
When the autumn leaves fall, Larae Koerber is envious of those who live on the Ferndale side of West End Street.
On Koerber's side of West End, residents must bag their leaves and take them to the curb. On the Ferndale side, the city allows residents to rake their leaves into the street where a city truck vacuums them up -- a service Hazel Park cut a few years ago to save money and keep its streets cleaner.
The lack of uniformity in services is puzzling, said Koerber, 42.
"I think it's kind of strange," she said. "We're all paying taxes."
The barrier between the cities, West End Street, is barely a dozen paces wide, but it marks a change in address and a change in service. It's one example of how fragmented boundaries in suburban Detroit create obstacles, widely different services and increased costs for residents and businesses.
Increasingly, officials are asking whether the quilt of 130 cities, townships and villages that surround Detroit is an outmoded structure, too costly in a time of government budget crises and when there is a need to think regionally.
Some experts say that the state could do with fewer municipalities.
"When you look at it rationally, there is every reason to consolidate, except that it flies in the face of emotion," said Susan Hannah, a political science professor at Indiana University-Purdue University in Fort Wayne who has studied local government mergers for years.
Hannah has studied 132 consolidation votes nationwide since 1947 and found that 23 of them were approved by voters -- a 17% success rate. She said while immediate savings are hard to identify, merged governments can be more efficient and save money in the long run.
Benefits of mergers
Michigan's economic crisis has reduced tax revenues and prompted cuts in key services -- from fewer cops to shorter library hours. As a result, local governments are eyeing consolidations of police and fire protection as never before. But going a step farther to full-fledged mergers, historically, has been taboo.
The move poses massive political and logistical hurdles, including convincing skeptical voters protective of their hometowns, some of who fear falling property values if they merge with poorer cities. Supporters say mergers streamline government and save money while critics contend they simply shift costs around and fatten middle management.
But the idea is garnering fresh attention around the state, most prominently in Farmington and Farmington Hills, where each city has asked Oakland County to fund a study on sharing services and a full-fledged merger.
Besides saving money, some officials and experts say mergers could also strengthen regional ties. They say the time has come to reconsider long-held assumptions about boundaries.
"To be able to break down the borders for the units of government and look more regionally has to be good," said Eric Lupher, who studies local government for the independent Citizens Research Council of Michigan.
One area that stands out for service duplication in a small area, experts and officials say, is southeast Oakland County where Koerber lives.
Nowhere in Michigan is there a more concentrated patchwork of communities than the 38 square miles there that contain nine cities and one township -- Berkley, Clawson, Ferndale, Hazel Park, Huntington Woods, Madison Heights, Oak Park, Pleasant Ridge, Royal Oak and Royal Oak Township.
That's 10 governments in an area about the size of a city like Livonia or most townships.
"Across the U.S., it's hard to find that much government in one place," said Eric Scorsone, codirector of the Michigan State University Extension State and Local Government Program, which studies municipal sharing and mergers.
The density of geography and population there makes merger a logical issue to examine for potential savings, Scorsone said.
These 10 municipalities spend more than $9 million combined on salaries and benefits so that most can have their own city manager or township supervisor, clerk, treasurer, fire chief, police chief and other department directors, according to records obtained by the Free Press.
"If you look at southeast Oakland, you will see a mind-boggling repetition of services," said Maxine Berman, Gov. Jennifer Granholm's point person on efforts to encourage consolidation of services between local governments.
Mixed reactions
State Senate Majority Leader Mike Bishop, R-Rochester, said that the inefficiency of having so many local governments in the tri-county area wastes money and discourages businesses from locating here.
Bryan Warmuskerken notices the inefficiencies as he drives his Capt. Kool Ice Cream truck through Ferndale. He is forced to turn around at the city limit, avoiding an identical Hazel Park neighborhood across the street. To deliver there, he'd have to return to work and pick up another truck that has a Hazel Park permit.
"This truck is only permitted in Oak Park and Ferndale," he said.
For most of the 19th Century, all but 2 square miles of where these 10 municipalities exist consisted of a single government, Royal Oak Township.
But beginning in 1891 and ending in 1955, pieces of the township incorporated and annexed land to create the present-day configuration where a little more than 0.5 square miles is all that's left of Royal Oak Township.
"Clearly the way we evolved with our corporate boundaries hasn't produced the most efficient model of delivering services," said Huntington Woods City Manager Alex Allie.
It is theoretical only -- no one has proposed the idea -- but if the 10 municipalities were to become one, it would create Michigan's third-largest city at about 192,000 people, behind only Detroit and Grand Rapids, and enable the area to decide whether it really needs nine libraries and 10 community centers, reduce other capital costs and unify their regulatory climate for business.
For many residents, the possibility of such a change is unnerving.
Worries in the wealthier communities about whether merging with poorer communities, such as Hazel Park and Royal Oak Township might bring down their property values is one concern. Another is the possibility of a tax increase for residents in the communities' with lower property taxes.
Some residents just fear the loss of their hometown.
"We'd just become one huge metropolitan suburb with no identity," said Thomas Wurdock, 77, who has lived in Royal Oak almost his entire life. "There may be some savings to it, but I just don't think it's worth it. I don't like that idea at all."
But several others voiced openness to merging their community into another if they would see tangible benefits.
Veronica Lujic, 36, an Oak Park resident said that although she's happy in the city, a merger could save money, meaning lights for her street and allowing residents to pool resources for better amenities. For example, Oak Park's community center and library are small and aging.
"With that kind of money, you can have a community center where kids can go," she said, listing off numerous additions, such as a water park. "The only reason to merge is money."
Other merger talks
Besides Farmington and Farmington Hills, merger talk is percolating between Tawas City and East Tawas, as well as East Lansing and Lansing.
It is only one component of discussions about ways to save money at the local level, a debate driven by the weak economy, which has reduced aid from the state; a tax system that constricts the ability of fully developed municipalities to increase revenue; and legacy costs agreed to years ago.
Then there are the discussions at the state level, where officials are pushing at a minimum for local governments to share services. Granholm is promising more money to governments that can show they are doing so.
One controversial bill would shift several township functions -- assessing property values, collecting property taxes and administering elections -- to county control.
Does merger equal savings?
Most of the municipal leaders in the 10 communities agree there would be some savings if they were merged into one city, although several insisted the savings would be relatively small.
But those savings could easily exceed the savings from merely sharing services, said Robert Daddow, deputy Oakland County executive, who oversees a county grant program that funds studies of consolidated services.
"Obviously, there would be" savings, Daddow said. "Administration, that's where the real bucks are."
But Daddow is a realist about it, noting the difficulties -- political and otherwise -- of merging whole units of government. He doesn't expect to see any soon.
Bishop said there are pockets of the state where residents should examine merging, especially where population is declining.
"I don't think any community can avoid the discussion on whether to consolidate or merge services in some way," he said.
A five-year study of the only modern merger in Michigan -- the 2001 consolidation of Iron River, Stambaugh and the village of Mineral Hills in the Upper Peninsula into one city, which takes the name Iron River -- showed those governments spending 10% less than what they spent on their own.
But that study by the MSU extension program also cautioned against using it as evidence of what could be saved by merging cities in urban areas because studies of other municipal mergers cast doubt on savings and the three communities are relatively small.
Others aren't so sure about the overall savings.
"I think in regards to managers, police chiefs, fire chiefs, you have some potential for savings," said Michael LaFaive, fiscal policy director for the Mackinac Center for Public Policy in Midland. "But it's a mixed bag. Every change has costs and benefits and the question is, would the marginal benefit outweigh the cost of the change?"
Generally, leaders in the 10 communities say sufficient savings can be found by expanding the number of joint services. Four of the 10 are studying whether to merge their fire departments and two might discuss consolidating public safety departments.
Substantial sharing of services already exists among the communities.
There's a water authority in which five participate, mutual aid pacts in emergencies and a joint garbage and recycling authority to which eight belong. Most residents can use any of the nine libraries in the communities, some share animal control and others' pool rec teams to have enough squads for a league.
Hazel Park City Manager Ed Klobucher said that merging communities is extremely difficult because each has its own retirement system, debt, ordinances and labor contracts.
More middle management would be needed even as top administrators were wiped out, Klobucher said.
"That's kind of the illusion: 'We're only going to have one chief of police. We're only going to have one fire chief,' " he said, citing supporters' arguments. "But then you would have maybe two assistant chiefs."
Ferndale City Manager Robert Bruner said merging cities is a short-term solution to the long-term troubles facing municipal governments, which, once fully developed, become severely limited in their ability to grow their tax base.
"I think there may be some value in that in some places, but if bigger was always better, then the city of Detroit would be the most financially stable community in the state, and that's obviously not the case," he said. "I don't think it is the silver bullet that is going to save Michigan or some communities."
Combining services, like the proposed fire merger, makes sense because they can be tailored to fit a need, Bruner said.
Experts agree that the best opportunities for savings come from pooling on services that are equipment-intensive, such as fire and water, or on services that require highly educated and expensive personnel, such as assessing and engineering.
Scorsone said Iron River's merger succeeded, in part, because momentum built locally instead of having it forced.
"It's a question that has to be answered on a region by region basis," he said.
Contact ZACHARY GORCHOW at 313-223-4536 or zgorchow@freepress.com. Contact JOHN WISELY at 248-351-3696 or jwisely@freepress.com.
http://www.freep.com/apps/pbcs.dll/article?AID=/20070729/NEWS05/707290583