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Sunday, 21 June 2015 21:00

Consolidation talks revive as state seeks to limit local control

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In light of legislative attempts to break through the regulatory patchwork businesses face in communities throughout Michigan, some local government officials are asking whether the state has too many layers of government in the first place.

In opposing broadly written legislation that would strip the ability of municipalities to set minimum wage and benefits policies, Kalamazoo Mayor Bobby Hopewell recently told MiBiz that perhaps a long-term solution to the underlying issue of regulatory variations would be to consolidate some of the state’s more than 1,800 governmental units.

“I think (that) would be a way to deal with the patchwork issue,” Hopewell said, noting that consolidation — not limiting government’s ability to set local rules — could help create a more uniform environment for businesses in the state.

Consolidation has gained attention in cities throughout Michigan, particularly in Grand Rapids and Lansing as budget constraints are pushing governments to become more efficient. However, the practice of eliminating some layers of township, city and county government remains a long shot because of limiting state statutes and what observers call “parochial” politics.

“I think the mayor of Kalamazoo is right,” said Nyal Deems, a partner at Varnum LLP who led the One Kent Coalition’s unsuccessful plan to merge Kent County with the city of Grand Rapids.

“There are 39 governments in Kent County, not counting schools. This is not an efficient way to run anything,” Deems said. “You would never design this system if you started out today.”

One Kent launched its initiative nearly five years ago but it fizzled out in 2013 after a county workgroup did not recommend it for approval. Deems said he’s still approached about whether he will revisit the plan, although he has no plans to do so yet.

But looking at consolidated cities like Indianapolis, Louisville and Nashville, “we saw it as something that could be done here,” Deems said. “The hard part is to get enough people together. In a sense, it is kind of a campaign.”

Indeed, while public officials may tout the benefits of finding efficient ways to spend taxpayer dollars, most often they stop short of potentially doing so through consolidating units of government.

Representatives from Michigan’s business community are the main proponents of H.B. 4052, a broadly written bill that opponents say would greatly restrict local governments’ ability to be involved with employer/employee relationships and that they argue could hurt economic development. However, business groups believe consolidation should be considered if it will create efficiencies, but they don’t think reducing the layers of government alone will directly solve the patchwork regulatory challenge for employers.

“Separate but related” is how Michigan Chamber of Commerce President and CEO Rich Studley compared consolidation efforts to H.B. 4052.

“I think (Mayor Hopewell) raises a very good question,” Studley told MiBiz. “Do separate and independent units of local government that were established 30, 40, 50, 60, 70, 80, 90 years ago still make sense? Generally, we would agree with the mayor that regional cooperation is a real opportunity for cities, villages, townships, counties and the business community to work together and talk about how to deliver services more efficiently. I think there are forward-looking local government officials around the state who are looking into this question.”

However, Studley said the two issues aren’t quite the same, and the chamber tends to support the sharing of services over the more divisive language around consolidation.

“At first glance, it might appear like those are related issues, but in terms of (H.B. 4052), we really see them as separate but related issues,” he said.

Nearly three weeks after the House passed H.B. 4052 in late May, the Senate approved an amended version that addresses some of the concerns raised by groups like the Michigan Municipal League and the Michigan Townships Association. The MML still opposes the amended bill because it conflicts with the tenets of local control.

The Legislature was finalizing the bills to send to the Governor’s office as this edition went to press.

Rick Baker, who became president and CEO of the Grand Rapids Area Chamber of Commerce when the One Kent Coalition was in its infancy in 2011, said the local chamber didn’t take a position on the proposal before it died in 2013.

Based on his experience in the Quad Cities area of Illinois, where voters decided in 1997 to merge two small cities but not include others after a contentious campaign, Baker said such plans are “possible, but it’s tough work getting the electorate to jump on board with consolidation.”

In some cases, it has been a decades-long process, he said.

“I think it’s a good idea. It gains efficiencies,” Baker said, speaking personally, but not on behalf of the chamber. “You can streamline and get a solid team operating on a more uniform basis across the region. It’s worth a conversation.”

But even some public-sector mergers still leave behind a large number of local units of government, Baker said, which does not necessarily address the patchwork concern.

Roadblocks to consolidation

Based on the results of previous consolidation efforts in communities across Michigan, the idea appears to work much better conceptually than it does in practice.

The One Kent Coalition spent two years building support for the plan to merge the city of Grand Rapids with the county — the two largest governmental entities in the area — to share duplicative services. It got so far as to draft proposed legislation, but Deems said it was never formally introduced before the campaign was abandoned.

In 2013, voters in Saugatuck and Douglas in Southwest Michigan rejected a plan to merge those two entities. Supporters said savings of nearly $500,000 could have been achieved by eliminating duplicative positions, but opponents reportedly sought to maintain the unique character of each community.

In recent years, Lansing Mayor Virg Bernero has been outspoken about his desire to form a metro Lansing region that would absorb the surrounding townships and cities under one Lansing entity. He has singled out Lansing Township, in particular, as unnecessary because it is made up of five non-contiguous islands around the city of Lansing.

But his ideas have met with opposition from leaders in nearby communities who say Bernero’s rhetoric was initially divisive among area leaders. Instead, they say a more productive route is sharing services. Lansing and East Lansing, for example, share a fire chief. Others still said they didn’t want their communities to serve as a sort of bailout to Lansing’s budget problems.

Robert Buchanan, an attorney at Grand Rapids-based Law Weathers PC who specializes in municipal issues, said consolidation presents not only a host of political questions, but also legal ones.

Particularly, Buchanan questioned the fate of public-sector collective bargaining agreements that have already been negotiated.

“How are you going to merge those? It’s a practical problem, but also a legal problem,” he said.

Buchanan also said the initial cost to merge entities might be a barrier as well.

“It’s really difficult to do,” he said.

In order for consolidation to happen, voters in each affected community would have to approve a referendum, Buchanan said, implying the political challenge for doing so.

But he also said consolidation can be a means to solve inner-city problems associated with a declining population and a shrinking tax base.

“That’s sort of an interesting possibility that you can actually diminish the impact on cities,” Buchanan said. “I can imagine (for) the city of Grand Rapids — if it had the ability to share the tax burden with a large population — that it would ease a lot of social issues.”

Concerns over job security?

Kent County Administrator Daryl Delabbio says that while many local officials felt the One Kent campaign was “not very well thought through and was pretty ill-conceived,” that doesn’t mean he or others are opposed to consolidation in West Michigan.

“What you have to do is consolidate like forms of government,” he said, such as counties with counties, cities with cities or townships with townships. “To take a complex organization like the county and a complex organization like the city of Grand Rapids and consolidate makes no sense.”

But while noting that he doesn’t “have to protect” his job at this point in his career, Delabbio still says the “parochialism” among different units of government remains the biggest challenge.

Instead, the county has worked with the business community to find operating efficiencies, such as consolidating dispatch operations between the city and county, he said.

Deems of Varnum said the business community should be closely familiar with the issue of consolidation, an occurrence that happens all the time in the private sector.

“Governments don’t like to talk about what they’re not doing because it would be politically difficult or take away some of their power or jobs,” Deems said. “Governments insist on functioning on the opposite logic of how economic structures function.”

While Deems doesn’t have plans to revive the One Kent campaign, he is undeterred on whether it’s still a good concept.

“I think it’s a great idea,” he said. “It’s as pertinent now as when (One Kent) started.”

Read 3018 times Last modified on Sunday, 28 June 2015 18:01

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