Many of us in the academic world have debunked the myth about amalgamations saving money for decades – in my case through the last five editions of Local Government in Canada and in various articles including a February 1997 Municipal World item entitled “Sex, Lies, and Amalgamations.” Andrew Sanction, Robert Bish, Harry Kitchen, Wendell Cox, and Michael Keating – among others – have all explained why amalgamations don’t save money. None of this evidence made any difference to the Conservative government of Mike Harris, which remained faithful to its ideology while forcing amalgamations that reduced the number of municipalities in Ontario to some 100 fewer units than existed at the time of Confederation in 1867.
There are many reasons, but let’s briefly summarize just a few.
Amalgamations bring together municipalities with varying levels of service standard. We correct these disparities by levelling up – to the highest existing service standard. The resulting improvement in services (typically to outlying and more rural areas) is widely welcomed as a by-product of amalgamation, but such improvements raise costs rather than reducing them. Amalgamations also bring together municipalities with varying wage levels and union experiences. Once again, we resolve this disparity by levelling up, to the highest wages being paid – and we also extend unionization across the new municipality.
Amalgamations don’t achieve the promised economies of scale in service delivery because the optimum size for delivering municipal services varies widely. Indeed, for services such as policing, there is ample evidence to show that some aspects (such as neighbourhood patrols) are best handled by small detachments whereas others (such as dispatch systems and training facilities) are best handled over much larger areas. Having the delivery of this service divided between upper and lower tier municipalities is more efficient rather than being wasteful duplication. As with many things, “one size doesn’t fit all,” even though amalgamation forces that approach.
Amalgamations also don’t save money on the salaries of municipal councillors, even though the Harris Government announced every new amalgamation with a reference to the number of municipal council positions being eliminated – as if this diminution in local democracy was a self-evident boon to mankind. The increased workload for councillors of enlarged municipalities usually leads to salary increases and (in some cases to the addition of support staff for councillors). The net result is no savings from fewer councillors, not that council salaries ever were a significant part of the total cost of municipal government.
Regional Collaboration Not Municipal Mergers is the Key
Spicer and Found provide examples of effective intermunicipal collaboration and offer recommendations for facilitating greater use of this approach. I concur but would broaden the approach even more by encouraging the involvement of private partners as well. As I have written elsewhere, many of the most dynamic and competitive regions in North America have a fragmented municipal structure but have flourished because of regional collaboration that has often been spearheaded by the private sector. Here again, a few examples will illustrate this fact.
The economic success of Silicon Valley, California arose from a private initiative that brought together key stakeholders (including municipal governments) in the San Jose region to develop a vision and to discuss means of attracting computer-associated manufacturing. Pittsburgh has enjoyed an economic revival even though it has more than 120 separate municipal governments in the central city and surrounding Allegheny County. It has done so in part through a limited tax-sharing plan operated by the Allegheny Regional Asset District and because of the work of a private sector leadership body (the Allegheny Conference on Community Development) that worked with public and private partners to promote economic growth in Pittsburgh and southwestern Pennsylvania. The south side of Chicago suffered a severe economic downturn (well before the financial meltdown of 2008) when its steel mills and railyards gave way to a new service-based economy. But the Southland revived dramatically when dozens of municipalities (Chicago has some 270 of them!) came together to share assets and work on an economic revitalization strategy as part of a regional business plan created through collaboration between the public and private sector.
One More Time: Bigger is Not Necessarily Better
I can only hope that the paper by Spicer and Found will help to banish the lingering notion that the solution to inadequate municipal finances, overlapping municipal issues, global competition – and whatever other challenges appear – is to force the amalgamation of municipalities, especially if it is promoted on the spurious ground of saving money.