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Shared service agreements and government consolidations can lead to greater efficiencies, lower costs and ultimately reduced property taxes. If there was ever a time for seeking property tax reductions it is now. The state is deferring or cutting back on aid to local government and the tax bases are shrinking due to a decrease in property values. The property tax is the hardest tax to pay, particularly in a down economy. Income and sales taxes can be discretionary because they correlate with disposable income and employment. Whether a person is making less money or is unemployed the property tax is mandatory. If not paid the penalty can be the loss of ones home.
The Councilman is correct but staff is not at fault. Over the past few years attempts have been made to work with neighboring municipalities and sister governments such as the school and park districts to seek efficiencies through joint purchasing, shared administrative overhead such as accounting and human resources, shared maintenance such as landscaping and vehicle repair, and intergovernmental agreements on police, fire and water. Intergovernmental committees have been formed including both elected officials and administrators. While there has been some progress the impact on the tax bill has been minimal.
I have concluded that we are going about this wrong and my thinking has been informed by what other state and local governments are doing. In New York Governor Cuomo’s budget included $79 million to support municipal efficiency and consolidation. Local governments can receive up to $5 million to study and implement mergers and shared services agreements. For example one county jointly purchased energy with its community college resulting in a savings of $300,000 per year.
In Michigan the Governor’s 2012 budget replaced $200 million in revenue sharing with the same amount in grants that would be awarded to communities that come up with ways to save money through consolidation. One hurdle, however, has been state law pertaining to collective bargaining agreements. This law disallows wage and benefit cuts for police and fireman transferring into a new authority to provide the same service to several communities. Consequently savings to taxpayers are limited.
A compromise proposal offered up by a group of legislators is to have the new authority assume existing labor contracts for a year subsequent to merger. In the interim labor and management would have to negotiate a new contract, which could include reduced jobs as well as wage and benefit reductions.
I realize that layoffs add to unemployment but there are strategies for implementation such as using attrition to cut jobs (i.e. simply do not replace employees that retire or leave for other employment opportunities). It should be noted that high property taxes also contribute to unemployment through discouraging economic development.
Similar to Michigan and New York consolidation and cost sharing amongst local government must come from the top. Here is my recommendation to the Governor and the General Assembly: mandate all separate elementary and high school districts to consolidate transportation services and overhead such as finance and human resources; have governments serving one community such as cities, park districts, and schools to share services such as building and vehicle maintenance; landscaping services; waste management and administrative services mentioned ( e.g. accounting and human resources); have counties assume services provided by townships and eliminate the latter in areas where municipalities are incorporated. Townships can remain in downstate areas where they provide essential services such as water and sewer; and have neighboring communities set up joint service agreements for public safety(i.e. police and fire). In time, once the fiscal benefits of intergovernmental cooperation are apparent the state can then move towards eliminating superfluous levels of government and require consolidations (e.g. Separate elementary and high school districts into single unit districts).
I realize the state is not in the best of shape to provide incentive grants. However, the Governor could take a page from Michigan’s play book and convert a portion of existing aid to local governments for the study and implementation of the policies mentioned above. There are over 87,000 units of local governments in the United States. Illinois constitutes 8 percent of the total. It is said that necessity is the mother of invention. In the great recession governments lost 20% of their revenues, unemployment has been at 9 percent and is still at a high of 8 percent, people in Highland Park and Illinois are hurting, now is the time to act.
Former Highland Park Mayor