Michael Hicks, Ph.D., director Bureau of Business Research, Ball State University
I have just finished reading one of the more remarkable products of a government commission I have seen in 25 years of public service. The recommendations of the Shepard-Kernan Report (formally the Indiana Commission on Local Government Reform), are a tonic to anyone who cares about local government efficiency and improved local services.
The Commission recommended changes to the way Indiana's government provides local services. Our current system looks much like a pre-statehood government, where services are provided in a disconnected fashion with budgetary decisions answerable to state bureaucracies, not local voters. It is this organization of government that has caused much of the run-up in property taxes (and so shocked me when I first came to Indiana).
The Commission proposed moving the budgetary authority of the more than 3,000 local government entities in Indiana to the county level. This means strengthening the role of elected county officials who will oversee public safety, library and administrative duties for counties. Cities will remain, but townships would no longer serve a fiscal role.
Small school districts would be consolidated (those with fewer than 2,000 students). The research on school and district size clearly suggests this is a prudent cost saving measure that will have no effect on educational outcomes. School spending on infrastructure (bonding) would need approval by the taxing body that bears the cost.
The proposed reforms are crucial to linking the cost of public services to their quality. The Commission has taken care to make the small recommendations so important for success of the proposal. Expanded county legislative bodies will provide more representative government, coordinating elections to even number years will boost voter turn-out, thus dampening the effect of single issue voters and crucially, the proposals prevent local government employees from also serving as elected officials within that unit.
It is easy to see that these proposals will affect local governance. I think there are three effects; reduced redundancy in services, increased efficiency in operations and finally voter input on spending. It is difficult to estimate the impacts of these effects in dollar terms, but I offer the following as an experienced guess.
The redundancy in service provision is remarkable. I live in a county with 7 or 8 police departments depending on who you count (it makes you wonder how New York gets by with two for their 12 million souls). We may not have too many police officers in my county, but we have far too many chiefs. I think a savings of $300 million is a very conservative estimate.
Increased efficiency in payroll, purchasing, equipping and contracting ought to shave 5 percent from the $8.3 billion in anticipated local costs (another $415 million in savings).
The biggest impact will be restoring the link between the cost of public services and their price. Across the U.S. local tax rates vary widely (we're about average in Indiana). The reason for this variability is that voters choose the mix of taxes and public services they receive. Communities that do a better job with their resources attract a larger tax base and more revenue. So, it is entirely possible that local spending will increase, but at the will of the voters.
It's not a perfect system, as Churchill sagely observed, "Merely the best among those that have been tried so far."