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Big Government is Better Than Too Many Small Ones

University of Pittsburgh economist Chris Briem is out with a post titled “Things That Make Libertarians Implode," on the new Census report showing there are 84,004 local governments in the United States.

Chris is right that that’s a lot of government, but what’s interesting is how little you actually hear real live libertarians complaining about this issue. State-of-the-art anti-government thinking seems to be that having a bunch of tiny local governments is really a good thing, since competition between lots of local governments for high income residents acts as a check on wealth redistribution, and small tax bases curtail local governments’ ability to provide a robust menu of public services. If anything, the sentiment seems to be that more federal and state powers ought to devolve down to small local units, or even better, neighborhood units.

For exactly the same reasons, you’ll often find me arguing that liberals really ought to be horrified with the current of landscape of 2562 municipal governments in Pennslyvania, and in other "little box" local government states throughout the Northeast and Midwest .

Those of us who prefer a more progressive distribution of the tax burden within regions, and more generous, professionalized local public services, are seriously hampered by the lack of regional tax bases and low-capacity local government organizations who can barely deliver on basics like police and fire protection.

One point that I think is underappreciated by libertarians is the extent to which the “pebbles in a stream” analogy, where lots of little regulations add up to a lot of overhead for businesses, applies to balkanized local government. The sheer volume of local regulations that differ between cities and boroughs and townships and counties makes doing business in little box states less predictable than in Southern and Western states where public policies are the same across big regions. And while it’s true that small towns with low levels of public services have low taxes, there is some evidence to suggest that regionalizing more public services would lower the median local tax bill within metro regions, since this would cut out a fair amount of redundancy and administrative duplication.

Several governors have taken up the issue of local government consolidation in recent years, holding it up as a smarter way to trim state and local budgets without hurting the delivery of public services.

New York Governor Andrew Cuomo and New Jersey Governor Chris Christie have taken similar approaches, by reducing legal and process hurdles to consolidating local governments. Both states have empowered citizens to initiate the process directly via petition, rather than having to persuade local politicians to support a reform that compromises their political power.

Both governors have also pledged to provide state funding for local consolidation planning studies and expert assistance to local governments considering mergers, although Governor Christie eliminated that funding in 2011.

While this approach has already resulted in a successful ballot referendum to merge Princeton Borough with Princeton Township in New Jersey, the track record for voluntary consolidation initiatives does not inspire hope. As municipal consolidation guru David Rusk likes to point out, between 1902 and 2011 voters have approved just 27 of the 102 referendums put before them.

The uninspiring track record of voluntary consolidation initiatives has led some politicians to endorse a more coercive role for state government in the process.

Rick Snyder of Michigan has been making state aid to cities contingent on evidence of progress toward consolidating services. Some lawmakers, like Pennsylvania Rep. Thomas Caltagirone, want to cut local governments out of the decision altogether. Caltagirone introduced a bill in 2010 that would've had the state simply consolidate all local governments into the state's 67 counties, establishing the counties as the basic units of local government.

While Caltagirone's bill was perhaps too radical to gain any traction, I think the focus on county services points the way forward.

Ed FitzGerald, the Executive of Cuyahoga County in Ohio, recently adopted an approach to regional services based on the Los Angeles County "contract cities" model in California, where individual cities and towns contract with the county to provide traditional municipal services instead of administering the services themselves.

FitzGerald has begun offering a menu of county services, including sewer maintenance, employee training and health insurance and phone support. So far, the county is providing one or more of these services to 10 of its 57 municipalities, and FitzGerald hopes to continue expanding the range of services and the number of municipalities contracting with the county.

While this approach doesn't immediately address the distributional concerns about tax fairness within regions, building up the capacity of county governments to provide municipal services seems like the most practical way to make progress toward the goal of regionalizing tax bases and increasing access to high quality local public services.