Chapter 1
Introduction
The governments of Stephens County and the City of Toccoa,
Avalon and Martin created the 2005 Consolidation Study Committee (Committee) to
assess the feasibility of consolidation of their governments. Serving in a leadership capacity on this
issue, the Committee has worked over the past several months to learn about
consolidation and create recommendations for the elected bodies of Stephens
County and the City of Toccoa. As part
of that effort, this committee contacted the Carl Vinson Institute of
Government to assess the feasibility of consolidating Stephens County and the
Cities of Toccoa, Martin, and Avalon.
To develop the feasibility report, the Institute interviewed
several department heads and representatives of Stephens County, Toccoa, and
Martin, held two focus group meetings, and met with the Committee. The interviews with department directors and
the focus groups provided different perspectives on consolidation and
identified the pros, cons, and obstacles associated with such a change in their
local governance structure. To assist
the Committee with their work, the Institute brought five persons who are very
knowledgeable about governmental consolidation to speak with and answer
questions from the Committee. Through
the speakers, the Committee explored how other governments have successfully
consolidated. The information collected
on consolidation by the Committee is incorporated into this document as
Appendix A.
This report is a summary of our research. It begins (Chapter 2) with an overview of
functional and governmental consolidation, reviewing prior research on
consolidations’ purposes, benefits, and limitations. In order to set the context for the feasibility of consolidation,
Chapter 3 gives a brief overview on the demographic and economic
characteristics of Stephens and Toccoa as well as basics about both
governments. The following chapter
provides a brief fiscal assessment for Toccoa and Stephens in order to
determine whether there exist financial disparities that might hinder
consolidation. Chapter 5 discusses
current and previous consolidation efforts by the governments and makes suggestions
for services which might benefit from functional consolidation. Chapter 6 summarizes the major opportunities
and barriers to consolidation as presented to us by the interviewees. This
chapter represents the heart of the challenge to governmental consolidation. Please note that the viewpoints in Chapter 6
represent those of the interviewees, and not those of the Institute of
Government. Furthermore, these
statements do not reflect a consensus viewpoint or opinion, but are points that
might need to be addressed for a successful consolidation effort.
Chapter 2
Overview of
Consolidation
Forms and Degrees of Consolidation
While the term
“consolidation” typically is used to denote the merging of two governments into
one (i.e., full governmental consolidation), the term can also be used to
describe a more partial merging of services or departments, which is more
accurately described as “functional consolidation.” Functional consolidation is a strategy that can successfully be
used to overcome some of the major economic disadvantages of having two or more
small-scale governments. In
particular, it can make good economic sense to consolidate functions such as
utility services where there are large economies of scale that can be
captured. Typically services that can
be delivered cheaper in the larger quantities that consolidation affords are
ones that have a large capital component or that have a function (e.g.,
billing) that can be applied across a number of existing services.
Functional consolidation
can be used as a strategy to achieve economies without changing the basic
governance structure that people are accustomed to. This can be particularly important when the citizens of the
respective jurisdictions have different views on issues such as planning and
zoning or quality of life ordinances.
Additionally, functional consolidation does not involve a change in the
boundaries for the areas where property tax revenues will be drawn. This
property boundary issue can be a factor in cases where there is a large
discrepancy between the property wealth of one jurisdiction and that of the
other(s). In these instances, a full
governmental consolidation could potentially have a positive fiscal impact on
some taxpayers while having a negative impact on others. It should be recognized, however, that this
differential impact can be mitigated through strategies such as special taxing
and service districts.
Another key feature of
functional consolidation is its temporary nature. Functional consolidation typically requires on-going approval by
the elected officials of the participating governments. This requirement can make the consolidation
highly vulnerable to inter-governmental disputes (whether or not the dispute
concerns the function that is consolidated or not). Similarly, with a change in commission or council members or a
change in circumstances, an agreement regarding a consolidated function may
come to seem less fair than it was when first negotiated. In contrast, full governmental consolidation
generally precludes any return to the status quo.
Also, functional
consolidation does not eliminate the costs of the consolidated department
managers and staff having to be accountable to two or more governments. The additional costs of maintaining multiple
records and costs accounts and providing reports in different venues and
formats means that taxpayers typically will not receive the same level of
savings from functional consolidation that they would from full governmental
consolidation.
It is generally recognized
that not all public services have the same cost structure.
Consequently, not all will achieve economies of scale from consolidation. A potential implication of this finding is
that public officials can achieve many of the economies that are thought to
result from consolidation from selective functional consolidation. Moreover, by choosing wisely the function
one wants to consolidate, one can avoid the
diseconomies that may occur as a result of a full governmental
consolidation (i.e., where one consolidates functions that may have
diseconomies of scale at the level of consolidation that is proposed).
Finally, functional consolidation of a complex service can
sometimes increase some of the administrative costs associated with the service. For example, a casual review of the contract
between Chatham County and the City of Savannah for the provision of a unified
law enforcement service suggests that these governments felt that it was
necessary to establish a much more elaborate accounting system related to this
service than had been in place prior to the agreement. Specifically, new special accounts were
needed to track spending and staff allocation in the respective districts as
well as the cost of ownership and uses of facilities and major equipment by the
two governments.
General
Research Findings on Consolidation
Over the course of the last few decades, faculty at the Carl
Vinson Institute of Government have had requests for information and assistance
from counties, cities, and citizen groups representing over a third of the
population of the state regarding a desire to change the core nature of local
government. Typically, these requests have come in the form of exploring the
potential for consolidating one or more city and county governments. More recently, we have been asked to assess
the fiscal impacts of incorporating new cities. In a few cases, we have been asked to look at both a new incorporation
and consolidation in the same community.
Conceptually, incorporation and consolidation are reforms that are
diametrically opposed to each other.
While consolidation has been of perennial interest to
communities across Georgia, creating new cities in the unincorporated areas of
a county has only recently been a matter of strong interest. The diverse interest of citizens in
fundamentally changing governance is mirrored in the political science
literature where a debate has been raging for decades between
“consolidationists” and “localist” (or pro-incorporation or “fragmentationists”)
points of view about local government (see Table 1).
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Table 1
Consolidation versus Further
Incorporation
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a)
Arguments for
Consolidation
i)
Reduces the chances that different jurisdictions will engage in
fratricidal competition for economic development (e.g., by engaging in a
business subsidy bidding war).
ii)
Multiple governments create confusion and less transparency among
citizens. By improving these factors as well as accountability (through
professional management), consolidation would lead to greater citizen
satisfaction and participation.
iii)
Corruption in the form of waste, fraud and abuse is more likely to
thrive in a system that is less transparent.
iv)
Consolidation prevents the suburban areas from abandoning the inner
city.
v)
Consolidation allows the city to expand its tax base to more of those
who enjoy the benefits of the city, but who currently do not contribute to
its fiscal health.
vi)
Consolidation reduces intra-metropolitan inequalities and racial and
income-based segregation.
vii) Economies of scale and
reductions in duplication can reduce cost of service delivery.
viii) External transaction costs
(e.g., the cost of coordination and bargains with other jurisdictions) are
reduced.
ix)
Will provide greater consideration of regional issues and needs
(e.g., particularly economic development, urban sprawl and environmental
externalities such as pollution).
Because fragmentation promotes competition in a number of areas, the
ability to cooperate in other areas is thought to be lessened when there are
more governments.
x)
Is typically associated with calls for a greater role for
professional management.
xi)
Reduces information costs for citizens, businesses and developers
(e.g., developers do not need to coordinate their efforts with multiple
governments).
xii) Jurisdictional multiplication
results in the favored quarter of the population capturing the largest share
of the region's public infrastructure investments and the largest share of
its job growth. Through retention of local powers, the favored quarter
is able to avoid taking on any of the region's social service burdens
(Cashin, 1999).
xiii) Consolidation supports the
ability to create a public interest that is larger than special local or ward
interests. Consolidation as another
form of the “at-large” election reform, i.e., the Progressive Era reform that
helped to undermine corrupt ward-based politics.
b)
Argument for Further
Incorporation (or at least against further consolidation)
i)
Greater allocative efficiency.
Citizens have more choice about the mix of services to be provided and
the amount of taxes to be collected.
Citizens choose to live in the areas that best suit their needs and
desires, thereby maximizing citizen satisfaction (Tiebout’s model of local
public economies).
ii)
More chances for representation and access to elected officials. With smaller districts citizens have a
chance of being heard by a representative.
iii)
The economies of scale that exist are only in a small number of
capital-intensive areas; for most service functions (e.g., fire, police,
recreation, etc.) economies of scale do not exist above the size of a fairly
small government entity. Most
economies of scale are typically captured through normal intergovernmental
coordination and agreements.
iv)
Decentralized local governments motivated by efficiency gains can
correct inter-jurisdictional externalities (inefficiencies) by themselves
through inter-local cooperation, thereby making consolidation for efficiency
purposes unnecessary (Shrestha, 2005).
v)
The large public bureaucracies that are created through consolidation
make for high internal coordination costs that do not exist in smaller
governments.
vi)
Greater chances for minority representation and power.
vii) Having more governments
means that there are more options with regard to the production of a service
(e.g., one government may choose to have another government provide the
service or to have a private entity produce the service). With large governments, both the scale of
operations and the tendency to produce services in house work against
multiple producers of services and the competition they bring.
viii) Small districts can more
easily take collective action on small-scale collective problems.
ix)
Greater ability to achieve self-determination.
x)
Metropolitan or regional issue can be addressed through a
metropolitan civil society (i.e., a web of voluntary agreements and
associations).
c)
The evidence on the debate
is mixed:
i)
Citizens’ satisfaction does not vary by type of government (DeHoog,
Lowery and Lyons 1990).
ii)
Reported efficiency gains from consolidation tend to be small
(Bloomquest and Parks 1995).
iii)
Non-consolidated government costs less. Non-consolidated governments
tend to have lower taxes and spending compared to consolidated ones (Benton
and Gamble 1984). This finding needs
to be understood in light of the finding that professionally managed
governments tend to have higher expenditures, perhaps as a result of a
realization by these managers of service needs as well as a greater ability
to make the case for those needs.
iv)
Multiple special-purpose governments in an area (i.e., jurisdictional
overlap) appears to be strongly related to the size of the local public
sectors (whether measured in revenues or expenditures), after controlling for
other relevant variables (Berry, 2002).
v)
Citizen participation is greater in non-consolidated governments
(Oliver, 2001).
vi)
Little or no evidence of a link between consolidation and economic
development. (Carr and Feiock 1999).
vii) Jurisdictional
multiplication does appear to exacerbate segregation by income and race.
viii) Jurisdictional multiplication
reduces efforts to address affordable housing issues (Basolo 2003).
ix)
Some scholars suggest that inter-local agreements and a web of
relationships across a metropolitan area can act to mitigate the effects of
jurisdictional competition on the ability to address regional problems
(Oakerson 1999).
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What Makes for a
Successful Consolidation?
Functional
Successful functional consolidation is based on two
processes: 1) choosing services to consolidate (or share); and 2) managing the
service delivery with regard to expectations.
The choice of services to functionally consolidate should
begin by examining the opportunities for achieving economies of scale that are
not otherwise possible. However, the
choice also needs to consider a number of other factors such as:
- Whether
the activity is critical to the government
- Whether
in-house management of the activity is critical
- Whether
immediate responsiveness to elected officials is critical
- Whether
the operation can acquire new skills, equipment, or facilities as a result
of a unified operation
- Whether
other functions depend on the service
- Whether
the functional consolidation will reduce service costs
Once the decision has been made to provide services in a
consolidated manner, the participating governments will then likely want to:
Clearly define the scope of the service and realistic
performance targets.
Create a governance regime that meets the expectations for
control and oversight by the participating governments. This governance regime will need to address
some key issues such as:
How the
service will be priced or funded?
What
expectations there are for growth and change?
What is the
operational or management philosophy?
What should
the new organizational culture be?
What is the
exit strategy if the consolidation goes sour?
What are the expectations regarding
transparency and communications?
Full Governmental
Whereas functional consolidation of a single department
tends to involve small costs that are on-going, full governmental consolidation
involves larger initial costs that typically disappear after a few years of
operations. The key challenge of full
governmental consolidation involves resolving most of the issues outlined above
regarding the consolidation of single service, but additionally requires
management of multiple demands at one time, including the following:
- The
choosing and integration of new leadership
- The
management of staff morale and the potential clash of organizational
cultures
- The
implementation of a new employee benefit package
- The
reconciliation of differences in ordinances
- The
implementation of common enforcement practices
- The
adoption of a single information system and the transfer of data to this
system
- The
potential renegotiation of contracts and on-going partnerships (e.g., with
the non-profit sector of the community)
- The
adoption of a common set of standard operating procedures (e.g., for
purchasing, accounting, and human resources)
- The
management of potential changes in service levels to citizens
- The
optimization of facility allocation and management
- The
emergence of new political alliances due to changes in election districts
and new issue coalitions
- Managing
and funding the extension of services to areas (e.g., the unincorporated
area) that previously did not receive the service or the same level of
service
- The
development of new understandings and workable relationships with respect
to the roles of key public officials (e.g., a consolidated government will
typically have a new charter that may define the roles of the
commission/council, mayor/chair, and manager/administrator in ways that
differ from either of the former governments).
- Managing
the expectations of different groups of citizens. Research suggests that it may be nearly
impossible to achieve the “promise” of consolidation due in part to the
fact that some of the goals of consolidation may contradict each other
(e.g., it is difficult to increase efficiency without risking equity).
As this list of challenges suggests, successful
consolidation places a great deal of stress on the stakeholders in this
process. It is not atypical for a good
portion of the local government employees and citizens to be dissatisfied with
the process in the years immediately after consolidation. However, this dissatisfaction appears to
decline after that time. In
particular, dissatisfaction tends to be concentrated among employees more than
among citizens.
Successful consolidation efforts generally are led by highly
effective leaders “who can rally the political elite, build upon a theme that
resonates in the community (specifically, economic development/growth).
Successful consolidation efforts also tend to be ones where
the leadership is able to parley the excitement about a new larger government
and its potential for improvement into increased funding from outside
sources. For example, the Unigov
government of the City/County of Indianapolis was able to attract substantial
federal, state and private investment to the downtown area (i.e., for every $1
spent by Unigov, $5.82 came in from other sources).
Consolidation
Experience of selected communities in Georgia
As a means to provide a more interactive learning experience
on governmental consolidation, the Institute of government brought several
practitioners to speak with the 2005 Consolidation Committee of Toccoa Martin
Avalon and Stephens County.
Below are individual summaries of their primary points and
experiences about consolidation.
Speaker Topics as
Presented to the Toccoa Stephens Consolidation Committee
October 24, 2005
Bob Snipes – Deputy
Manager, Athens-Clarke County Unified Government
Mr. Snipes covered the history of the Athens-Clarke
consolidation process. His experience
in the community dates to pre-consolidation as he served as the County Traffic
Engineer and the City Public Works Director before consolidation. He now works as the Deputy Manager for the
Unified Government. He covered some of
the political and practical issues in Athens-Clarke’s unification as well as
describing how the current government works.
He noted that the tax rate had not increased since unification, and in
fact has decreased slightly.
Furthermore, the number of employees per capita had not increased since
unification, resulting in greater efficiencies.
October 31, 2005
Joseph (Jack) Lumpkin
– Police Chief, Athens-Clarke County Unified Government, former police Chief in
Toccoa.
Chief Lumpkin gave an overview of the police versus Sheriff
functions in Athens-Clarke County. He
noted that prior to consolidation both Athens and Clarke County had police
departments and the Sheriff focused on the constitutional functions dealing
with the Jail, the Courthouse and the court system. As part of the discussion, Chief Lumpkin explained how he limited
transition costs and how the department integrated two prior police department
cultures.
November 7, 2005
John Culpepper –
Finance Director, Athens-Clarke County Unified Government
Mr. Culpepper’s experiences in the Finance Department prior
to consolidation as well as his current responsibilities as the Finance
Director, gave the Study Committee an opportunity to learn the historical
perspective on the fiscal issues in Athens and Clarke County. He explained the budget process and the use
of special taxing and service districts that enable the government to provide
differing levels and kinds of service to different areas of the community while
assuring that the cost is appropriately apportioned to the recipients of the
service.
November 16, 2005
Doug Westbery –
Manager, Cusseta – Chattahoochee County Consolidated Government
Mr. Westbery provided a detailed account of the events and
processes that led up to the most recent consolidation in Georgia: Cusseta and
Chattahoochee County. He described how
the existing debt of the city was handled and the benefits that have accrued to
the new government since unification.
November 28, 2005
Harry Franklin –
Reporter, Columbus Ledger Enquirer – Columbus Georgia
Mr. Franklin provided the background on the movement for
consolidation in Cusseta Chattahoochee County.
He has followed several consolidation efforts around the state and gave
his views of the benefits associated with this form of government.
Though frank about the challenges they faced when
consolidating the former city and county governments, the speakers said they
are not wishing for an end consolidation and a return to separate city and
county governments. Furthermore, the
public in their respective communities appears to be at least generally
satisfied with consolidation.
Chapter 3
Overview of
the City of Toccoa and Stephens County
As a means of better understanding the opportunities and
barriers to consolidation, it is important to first understand the community
itself. As part of that, this chapter
provides a brief overview of one, the demographic and economic characteristics
of the county and two, the operations of the City of Toccoa and Stephens
County.
Demographics
As Table 2 indicates, approximately 40 percent of the
population of Stephens County lives in the three cities in the county, with the
remaining half living in the unincorporated area. Based on the difference between the 1990 and the 2000 census, the
growth in population (with the exception of Avalon and Martin) appears to be
slightly greater in the unincorporated part of the county than in the
incorporated part.
Table 2: Population of Stephens County and the Cities in
Stephens County
The following three tables show the population growth for
the three counties surrounding Stephens County (Banks, Franklin, and
Habersham). Each of these counties has
experienced growth that is significantly greater population growth than
Stephens County.
Table 3: Banks County Population Growth
Table 4: Franklin County
Population Growth
Table 5: Habersham County
Population Growth
Race
Stephens County, both countywide and in the cities, is less
racially diverse than the statewide population. According to the 2000 Census, across all of Stephens County, 85.7
percent of the residents were White and 12.0 percent were Black. Hispanics, who can be identified as either
White or Black in the Census data, made up 1.0 percent of the county’s
population. Toccoa has a larger
minority population with 75.5 percent of the residents identifying themselves
as White and 21.5 percent as Black, according to 2000 Census. Hispanics, who may be identified as either
White or Black, represented 1.4 percent of the city's residents. The town of Avalon has a population that is
91.7 percent White and 7.9 percent Black or African-American, while the Town of
Martin is 72.0 percent White and 26.4 percent Black or African-American. Statewide, 65.1 percent of residents were
White, 28.7 percent were Black, and 5.3 percent were Hispanic.
Age
The population across Stephens County is slightly older than
the state as a whole. Countywide, 23.5
percent of Stephens County residents were age 18 or younger, while 15.6 percent
were age 65 or older. Similarly, 22.4 percent
of Toccoa’s residents were age 18 or younger, while 20.7 percent were age 65 or
older. Statewide, 26.5 percent were age
18 or younger and only 9.6 percent were age 65 or older. Looked at another way, according to the U.S.
2000 Census, the median ages for Stephens County (countywide), Toccoa, Avalon,
and Martin were 37.5, 39.2, 36.5,
and 37.5, respectively while the median age
statewide was few years younger at 33.4.
Female Headed Households
Countywide, there
are fewer households with children headed by females (6.2 percent) than the
statewide average of 8.6 percent. In Toccoa, the percentage of households with
children headed by women closely resembled the state average at 8.8 percent.
The average older
age of residents in Stephens can be seen in the total number of households with
children under 18 as well. Thirty
percent (30.5) of all households in the county included children under the age
of 18 compared to the statewide average of 35.0 percent. Furthermore, 16.4 percent of the heads of
households in Toccoa were 65 years or older in age, compared with the
statewide figure of just 7 percent.
Economics
In Steph
