The Realities of Consolidation"

(This is a Press Release. I saw an ad this morning where the organization that calls itself "Rebuild Government" apparently feels that if the lawsuit questioning the two separate votes is not constitutional, somehow the election will be valid. Hopefully, any court finding would require an entire new process. Of course, the organization that calls itself "Rebuild Government" started off saying it wasn't pro or anti Metro, it just wanted a "conversation" was actually raising over $500,000 to, in my opinion, support any Metro Charter. Hopefully any court decision will recognize that the election was held on the basis of two separate votes and, regardless of the court decision, this election will not be reversed.

Regardless, it is important that suburban voters VOTE. This Press Release was sent Sunday afternoon and is being reprinted for voter information.)

THE REALITIES OF CONSOLIDATION

Ron Williams and Tom Guleff

Save Shelby County

Consolidation is the only path to create a leaner, less expensive and more responsive Metro organization replacing Memphis and Shelby County government, or so we are led to believe by promoters. Why? Efficiency, they say. Their job was to recommend ways to improve the effectiveness and efficiency of local government, the commission members write. They believe their recommendations will do that and, as a result, lower the cost of local government and, by implication, should reduce property taxes. Too bad it’s not true. Making such a statement shows a remarkable lack of familiarity with the real world of local government consolidation. Even the experts who research this area question the inevitability of improved efficiency.

For instance, Indianapolis is used as an example of vibrant growth and success resulting from consolidation. However, the publication Indiana Policy Review surveyed researchers with direct knowledge of the effects of local government consolidation in the fall of 2005. Ninety percent of those responding believed that consolidation would not reduce taxes. Only about half with direct knowledge of Indianapolis believed local UNIGOV had reduced overall costs while more than half believed it was harder for citizens to access government services after the consolidation, Mr. Sam Stanley, Ph D. testified before the Indiana legislature

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The reasons for such results are complicated and reflect the practical difficulties of implementing consolidation. In many cases, the consolidation process simply negotiates up. That is, employees in local governments who are paid less are brought up to the pay scales of the best-paid government workers. Moreover, the transition costs of consolidation - renegotiating collective-bargaining agreements, developing and adopting common standards, restructuring and realigning public services - are routinely underestimated by the consolidation advocates. In fact, the most rigorous statistical studies of police and fire department consolidations find little or no impact on service levels, productivity or efficiencies.

As an incentive to suburban cities, the Commission included a provision in the charter to allow current annexation reserve areas to remain with the suburban cities, as provided in Tennessee Public Act 1101, allowing them to continue with their plans for future growth and development. This was against the finding of then County Attorney Brian Kuhn that annexation reserve areas would disappear under consolidation. Disregarding this advice, the commissioners sought a different opinion from a private law firm, Baker-Donnellson, which would be more to their liking and obtained it. The provision was subsequently included in the charter. Now comes the State Attorney General of Tennessee Robert Cooper Jr. who issued an opinion this week affirming the opinion of the County Attorney. So, growth and development plans of the suburban cities appear to be dead under the new charter.

This is only one example of the claimed benefits for consolidation not being well thought through. Advantages to the taxpayers of Memphis and Shelby County remain elusive or fuzzy. We asked the Charter Commission about many issues of concern to the voters throughout the past six months. There have never been clear facts and hard numbers given by them about:

• Efficiencies Gained – We contend there are few, if any, duplications resulting in efficiencies. Simply stated, efficiencies go down in bigger organizations.
• Organization Simplification – The new organization is an overlay of the two old ones with all the same functions and staff – just bigger. It will contain the same number of people.
• Projected Tax Rates – Tax rates will go up significantly in the General District due to cost shifts, single source school funding and increased costs.
• Cost Reductions – None have been demonstrated. We contend costs will go up.
• Staff Reductions – All jobs are guaranteed at first by the charter and claimed reductions will be realized through attrition. There’s no political stomach for layoffs.
• Salary & Benefit Leveling – Will level upwards to the highest values, increasing costs.
• Service Delivery – Projected to go down due to inefficiencies of the larger government bureaucracy
• Transition Costs – Very significant costs from merging systems and organizations are unidentified and no provisions for funding have been provided.

When asked about those things during the charter commission’s work, people were repeatedly told: “well, we’ll decrease work force by attrition”, or “that will be up to the transition commission or the new metro council”. The transition commission will be composed of people in city and county government who will be appointed to the position, not elected by you and I. The transition commission will create a plan that is recommended to the metro council. The council can amend it. Do you trust they will act in your best interests?

Advocates contend a metro government will offer a “one stop shop” for investors and developers, eliminating red tape and approvals by both Memphis and Shelby County. Despite not having consolidated government, most other urban communities are successful in attracting business and industry. They also have dual governments. They’ve figured out a way to make the process smooth and seamless without government merger. Importantly, companies that don’t choose Memphis look long and hard at other barriers to coming here: crime rate, work force deficiencies, education and property tax rates. They practically have to be bribed with PILOT tax incentives to come here, eroding the tax base. Those firms which locate to De Soto County don’t do so because of a consolidated government there. Either do those who re-locate from Memphis/Shelby County.

The frozen tax rate is a fallacy. Although the charter says the tax rate shall be capped for the first three years, it speaks of it as a single rate and doesn’t say when the three years begin. It’s actually composed of two rates: the general services tax and the urban services tax. When services that were previously paid wholly by Memphians are pushed over onto the general services district, the latter’s tax rate has to go up (while the urban services rate goes down). If the three years begin when Metro Government does, that’s not until year 2014. What happens to the tax rates between now and then is anybody’s guess.

The charter commission has agreed not to include consolidation of the two public school systems in its proposal for metro government. However, there is no prohibition for the new metro government, once established, or other interests to consider a merger of the Memphis City Schools and Shelby County Schools. In fact, metro government will establish the general services tax as the single-source funder to both systems with revenues split on an average daily attendance basis. Assuming metro picks up what Memphis has been contributing separately to MCS and adds in SCS’ share, the property tax rate would need to rise by at least 25%.

With a few exceptions, there aren’t many duplicated services. Cities and counties aren’t really tasked with the same responsibilities. Except for some urban-style services that Shelby County now provides in unincorporated areas, there are differences. Cities collect garbage, fix streets, police, respond to fire and medical emergencies, operate parks and recreation, provide public housing, handle community development and run libraries. Counties provide the justice system of courts and incarceration, local funding for education, the health department and the constitutional office functions. Any claimed cost reductions due to “duplicated services” are, in fact, minimal in the bigger picture, once the two are overlaid on each other.

Elections of the Mayor and Metro Council are nonpartisan under the new charter. Instant Run-Off Voting will apply when it can be implemented in the future using new software yet to be written, much less purchased. Given the difficulties, year after year, with the voting process in Shelby County, the confusion and the contentious arguments (sometimes well founded) of fraud and deception, its irrational to think that Shelby County voters are prepared for IRV. When it was promoted to the Charter Commission, it was clear that some (maybe many) of the commissioners were struggling to figure out how it works. It’s admirable to try to reduce election expenses by eliminating run-offs but not if the voters aren’t confident that their votes (for first, second, third, etc.) will be correctly counted. The two-party system in Memphis/Shelby County will effectively disappear for local elections.

Although a significant effort was made by the Charter Commission, the results are very disappointing. The opportunity for real change and reform has been missed. For many reasons, their product is one that practically nobody wants – the county and suburban mayors, the county and suburban legislative bodies, local unions, political and social groups, religious leaders and civic organizations all oppose it. What’s wrong with this picture and why did we go down this road? Consolidation is very risky at best, especially in today’s down economy. Once put in motion it can’t be reversed, leaving little room for error. It’s time to re-think the entire issue. Save Shelby County believes consolidation will not pass but serious reform in governance is desperately needed. That’s the reality.

We urge you to vote against consolidation!