Fewer Governments Can Increase Costs

The reality is that local government consolidations have generally resulted in higher taxes and more spending.

Indianapolis is often cited as a model for municipal consolidation. Yet Mayor Greg Ballard’s “100 Day Report”in 2008 indicated that Indianapolis “has lived beyond its means in recent years, and it is on an unsustainable financial path.” Not long before this, state taxpayers assumed the obligation for approximately $1 billion of future police and fire pensions.

Even before the great financial crisis, a structural deficit of $361 million was predicted by 2012. Further, the city’s latest comprehensive financial report (2009) indicates a net (unfunded) pension and post-retirement liability of approximately $1 billion. This is after borrowing $100 million in 2005 to pay down the unfunded pension liability.

None of this was sought or anticipated by consolidation promoters, or the committed and talented elected officials who have followed.

Why do government consolidations virtually never produce cost savings?

More at: http://www.ibj.com/cox-shrinking-government-can-increase-costs/PARAMS/article/24741

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