Consolidation and shared services: a proven method for saving tax dollars.

• Author: Smith, Christine

A Midwestern mayor--who happened to be involved in discussions about merging fire and EMS services with neighboring communities--recently had a heart attack. Grateful for the quick response of the paramedics, he admitted that at the time, the name on the side of the ambulance was irrelevant. What was important was the speed of their response and the treatment he received, which resulted in his full recovery.

The current fiscal environment is forcing local governments to transform the way they do business. Less funding is available at the state and federal levels, leading to a severe "trickle down" process. Local revenue sources are constrained because of the economic slowdown, tax caps, and public opposition to property and sales tax increases. Operational costs such as health benefits, energy costs, and pension benefit costs are growing faster than the community tax bases that support them. Simultaneously, constituents are also demanding more and better services.

Accordingly, municipal leaders must be proactive in balancing maintaining services while controlling tax rates. Elected and appointed officials who fail to do so will inevitably face the wrath of constituents at council meetings, on the street, and at the polling booth. For years, municipalities nationwide have looked to consolidation, or shared-service arrangements, in an ongoing effort to reduce or stabilize costs and maintain a high level of service in the face of ever-shrinking revenues. Consolidated municipal operations and shared-service arrangements are a time-tested and cost-effective service delivery alternative.

WHO CAN BENEFIT

Two or more units of government begin discussing consolidation and shared services when there is a sense that an opportunity exists to improve services and reduce costs to taxpayers. The catalyst for these discussions is often a poorly handled response by the municipalities, like a delayed response to a fire or avoidable injuries or deaths due to a natural disaster.

* Communities have a prior history of working together. Sometimes a "handshake" agreement to share equipment exists between municipalities at the department level. Other organizations have more formal agreements.

* Elected and appointed officials know their peers in neighboring communities and have already developed good relationships with them, often by building trust through periodic meetings.

* Communities perceive a mutual benefit to sharing services that is reasonably equal for all parties.

* Cost savings outweigh a perceived loss of control by the participating parties. This is an issue that becomes less difficult to negotiate if there is a previous working relationship between the municipalities.

* The existing services provided by the communities are comparable, or there is a recognition that service to residents could be improved if the communities worked together.

CHALLENGES TO OVERCOME

Municipalities that are considering consolidation need to assess each other's commitment to reducing overall spending. They also must discuss the many barriers they will need to overcome. The consolidation effort will fail if each barrier is not carefully considered before the process begins. There are a number of concerns to consider.

Loss of control. Department heads and elected officials usually perceive that they are losing control when entering into a shared-service project. As a result, they might immediately try to protect their turf instead of waiting for the facts to be developed and analyzed. For instance, if an inspections department is being consolidated, officials might wonder how they'll be able to tell the work is getting done if they cannot tell the building inspector what to do. This kind of concern requires a twofold response. First, all the participating parties must recognize that the outcomes of a consolidated organization will be the same as those of separate municipal departments. Second, everyone has to accept that consolidation may mean doing things differently New processes will likely be put in place, and everyone will need to adjust.

Potential problems. Particularly in the area of public safety, officials fear of loss of community identity, mishandled calls, or poor call response times. Department heads want...