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Functional Consolidation: The Key to Improved Public Services in Wisconsin

How can 850 fire departments deliver essential fire services to 1,850 different Wisconsin municipalities? By working together across governmental lines. In fact, the fire service is an outstanding example of how local governments across Wisconsin have joined together to provide basic services more effectively and efficiently than they could on their own. Most fire departments in our state serve two or more communities and a handful serve a dozen or more. This record shows the value of "functional consolidation" as a way to minimize taxpayer costs and maximize public services in the years ahead.

Intergovernmental cooperation should be based on several common-sense considerations:

  1. Local governments should continue to have the flexibility to respond to a "diversity of demands" and to retain distinctive community identities;

  2. Local governments should continue to be open, accountable and responsive to local citizens;

  3. All Wisconsin citizens (whether they live in a town, village or city) should have an equal voice in decisions affecting government services, budgets and policies;
  4. Local governments should achieve economies of scale – and pass the savings on to taxpayers -- where feasible by eliminating duplicative services, equipment and facilities;
  5. The cost of supporting local government services, equipment and facilities should be distributed in an equitable and accountable manner; and
  6. Intergovernmental cooperation should be the rule and distracting turf battles should be the (rare) exception.

One direct and realistic way to do all this is through "functional consolidation," which offers a strategy to achieve practical results. For example, when two towns agree to share the cost of a new brush chipper, both can deliver better town services while spreading the cost over a larger tax base. Such agreements are usually accomplished through either an "intergovernmental contract" (one town buys the chipper and leases it to the other) or a "joint project" (the two towns jointly buy, maintain and operate the chipper). One way or another, most Wisconsin towns have been doing this all along (a 1992 WTA survey supports this conclusion). Of course, town officials rarely think of these arrangements as "functional consolidations" or "intergovernmental contracts" – the idea of neighbors helping neighbors is just part of the way things are done in Wisconsin towns.

But now this simple idea may be just what Wisconsin needs to reinvent local government. The value of intergovernmental cooperation has been documented in Wisconsin for years. In May 1999, for example, the Legislative Audit Bureau (LAB) issued a "best practices" report entitled Local Cooperation to Maintain Roads and Streets that documented measurable savings. The LAB surveyed and interviewed town chairs and county highway commissioners in December 1998 to document the use and impact of cooperative agreements in the area of road maintenance. The report listed three different ways communities cooperate: 1) joint ownership; 2) group purchasing; and 3) unique resource-sharing arrangements. Examples of joint ownership typically involved specialized equipment that is used relatively infrequently, such as brush chippers. A cooperative attitude and a written agreement were cited as factors contributing to the success of this approach. Group purchasing usually involved materials or supplies (such as road salt or culverts), but sometimes included trucks and other motor vehicles. In these situations, the individual governments own the items purchased, but savings are achieved by reducing administrative overhead and by obtaining better bids. Adequate lead-time and solid communication were cited as important to the effectiveness of this strategy. More innovative plans were also listed in the report. For example, the researchers found two municipalities that trade snowplowing services in the winter for road grading services in the summer. The key to success in this strategy is the willingness to tailor the agreement to meet very specific local needs and resources.

Local governments should be given incentives to continue to move in that direction. One way to do this is by giving towns greater authority to plan for the future of their community and promote economic development. This will minimize turf issues and help set the stage for cooperative agreements. Another is removing regulatory barriers to cooperation (e.g., the ability of cities to effectively deny sanitary sewer services to towns without annexation).

The bottom line is that functional consolidation agreements can be structured to retain local control and fiscal accountability while also giving elected officials a powerful tool to enhance the quality and cost-effectiveness of municipal services.

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