Rightsizing Los Angeles Government.

• Author: Oakerson, Ronald

The attempt by San Fernando Valley and Hollywood residents (numbering more than 1.3 million) to separate from Los Angeles (nearly 4 million) is the most recent manifestation of discontent with municipal structure in the greater Los Angeles area. The grassroots secession effort began in the mid-1990s and culminated in an election defeat in November 2002. Although the ballot proposition won support from valley voters (51 percent), it failed to secure a majority of votes across the city as a whole, a state-mandated condition for passage. This effort is not the first toward establishing a separate city in the San Fernando Valley. In 1976, a group of valley activists, under the banner of the Committee Investigating Valley Independent City/County (CMCC), sought independence, but their attempt was stymied when state law was strategically amended to require Los Angeles City Council approval before the effort could move forward. (1)

In an effort to deter secession, the Los Angeles Charter Reform approved by voters in 1999 included provisions for the Department of Neighborhood Empowerment and Neighborhood Councils. By July 2004, more than eighty councils had been established. These councils, however, have no independent authority.

Time and again, Los Angeles has toyed with the idea of devolving authority to a system of borough governments. In 1909, Los Angeles wanted to annex the harbor communities of Wilmington and San Pedro. To induce the residents to agree, the city charter was amended to allow boroughs. In 1925, in response to concerns of residents in the San Fernando Valley and Harbor areas, the newly approved city charter included provisions for boroughs (McCarthy et al. 1998).

At many stages in the city's history, the authority to establish boroughs was offered to dissipate complaints. Yet each time an attempt was made to set up boroughs, city government blocked the effort (Fox and Lelyveld 2002).

The most recent borough proposals came as part of an effort to head off the San Fernando Valley and Hollywood secession efforts in 2002. One of the proposals came from former California State Assembly speaker Bob Hertzberg. In April 2004, Hertzberg announced his candidacy for the office of mayor. As a result, the borough debate is likely to resurface.

These efforts point to an underlying problem of "rightsizing Los Angeles" that is not going to go away. Rightsizing is at bottom a problem in the distribution of local authority to act. Specifically, it involves assessing and adjusting the scale at which it is appropriate to exercise authority to act on behalf of specific local communities. In this article, we first consider the issues of scale, authority, equity, and participation. We then draw conclusions with respect to Los Angeles and propose solutions.

The Role of Municipal Government

What we call "local government" is primarily an arrangement that allows the residents of a locality to act collectively to deal with collective problems. Local authority is the authority to act on behalf of specific local communities--specific places. Rightsizing therefore needs to be understood in relation to specific problems and places.

In Los Angeles, municipal authority is vested in elected and appointed officials, city departments, and agencies that operate far removed from the neighborhoods they serve. Opportunities for community groups to exercise authority over service provision are extremely limited. The severe limitation of variable local control is at the root of recent efforts by residents to reconstitute Los Angeles--be it through proposals for municipal boundary revisions, subcity governments or boroughs, or the establishment of neighborhood councils.

It is somewhat astonishing that anyone might think of a place the size of the city of Los Angeles as a single community that requires only a single scale of collective action among residents. Local governance pertains for the most part to solving place-specific problems. The number and diversity of place-specific problems to be found in an area the size of Los Angeles is simply staggering. Robert Bish wrote of Los Angeles, "People in Watts and Hollywood have preferences for public goods and services that differ from those of the majority of citizens in Los Angeles. [These areas and others] are, however, political nonentities with no formal mechanism for making their requirements felt in the city's political system" (1971, 92).

The appropriate scale at which to authorize collective action is one that adheres to the principle of incentive compatibility. The authority to deal with collective problems should be assigned at the scale that maximizes the incentive to act responsively. The city of Los Angeles currently reflects an exclusively large-scale approach to collective action.

In general, local jurisdictional boundaries should be drawn so as to motivate officials to act in response to residents' concerns, while encouraging the resident to participate in governance and oversee officials. In large cities, municipal officials often lack strong incentives to act in relation to the problems of specific neighborhoods. (2) Municipal officials tend to focus on citywide issues and to view neighborhood problems in that light.

For those interested in rightsizing Los Angeles, the issue is one of matching the authority to make provision for services to the size and shape of the problems being dealt with. One size does not fit all, nor does it have to. The scale at which services are provided--selected, financed, and procured through a governmental mechanism--does not have to coincide with the scale at which services are organized for the purpose of production and delivery to residents. Once a set of authoritative "provision units" has been established that appropriately captures residents' preferences, production can be organized so as to capture the diverse economies of scale associated with various services and service components and linked to provision units through a variety of arrangements that include contracting.

If rightsizing is to occur, rules of governance must be modified to allow residents flexibility in organizing various units of local government and in selecting service producers. Such flexibility would facilitate the transfer of service-provision authority from city hall and the central bureaucracy to local decision makers more responsive to local residents.

Advocates of municipal consolidation laud the benefits of an overarching government (see Sharpe 1995, esp. chap. 2). However, a singular metropolitan government is less suited to solving the multitude of local problems than is a process of metropolitan governance that embraces multiple jurisdictions. First, metropolitan government limits the residents' participation and oversight. Second, it presumes an overlying layer of government of a size and shape appropriate for all regional issues. In an area such as Los Angeles, however, metropolitan issues do not conform uniquely to one set of common boundaries. For example, the boundaries relevant to transportation and pollution issues, both generally seen as regional concerns, do not coincide. Metropolitan governance is best when it is structured to take advantage of the organized efforts of private individuals and public officials who align themselves in a variety of ways to deal with issues of collective importance.

Economies of Scale and Municipal Boundaries

Economies of scale vary across the range of services that city governments provide. Some services, such as police patrols, exhaust economies of scale relatively quickly. Others, such as pollution-control efforts, benefit from larger regional actions. For most public services, economies of scale in production are exhausted fairly rapidly as cities grow in size.

The scale at which the City of Los Angeles produces services is far beyond that thought to exhaust economies of scale. Research suggests that economies of scale are limited to 50,000 to 200,000 residents, depending on the service (Hirsch 1968; Svorny 2002 surveys the literature). Syracuse University economist John Yinger, author of several studies examining the production of municipal services, has concluded: "there is no evidence of economies of scale ... at very large city sizes. It makes no sense to oppose [breaking up Los Angeles] because of economies of scale" (personal communication, June 2002; see also Duncombe and Yinger 1993).

Rather, diseconomies of scale become evident in large cities, where costs of communication and coordination are relatively great. These diseconomies are less well measured because only a few very large cities exist in the United States, and variations in service conditions among these cities make it difficult to assess whether high costs reflect diseconomies of scale or conditions particular to a city. The high cost of government and the lack of attention to basic services in Los Angeles most likely reflect the difficulties of coordinating procurement and production of services on such a broad scale.

Inevitably, municipal government boundaries are appropriately sized for some services and not for others, which suggests the advantages of decoupling service production from service provision or procurement. Drawing on the pioneering work of Ostrom, Tiebout, and Warren (1961), whose research on metropolitan organization was done primarily in the Los Angeles area, Ronald Oakerson (1999) argues that municipal government should be organized on the basis of provision rather than production.

Provision authority includes making decisions about raising revenue and how to spend it--in other words, deciding on the set of services that are to be provided with public funds. It also includes the authority to make rules governing behavior (zoning...