Indiana’s townships are again threatened by abolishment, as legislators prepare to consider merging their functions into coun- ties. As usual, proponents of abolition hold out the false promise of reduced spending and lower taxes. Their claims are based upon flawed before-the-fact academic studies and a blue-ribbon report that started from the assumption that abolishment was necessary.

The whole effort is based upon the “bigger-is-better” theory of government, that larger local governments are more efficient than smaller ones.

Abolition proponents seek to eliminate “duplication” of services. Yet, township fire departments, for example, have exclusive service areas, as do municipal fire departments. Adjacent township and municipal fire departments know their service areas and do not rush to answer the same calls.

Abolition proponents also assume that abolition will reduce the number of high paid management jobs. This is a recurring claim in the before-the-fact studies, but payroll expenses virtually always increase in the years following abolition.

The case for abolition is so fundamentally flawed that more than one press outlet has cited the prediction of a “statistical model” that abolishing township government would save more than $425 million per year. That is more than the state’s town- ships spent in 2007. The reality is that local government consolidations have generally resulted in higher taxes and more spending.

Spending per capita increased after local government consolidations in Jacksonville, Florida, Nashville, Tennessee and Athens- Clarke County, Georgia.

Canada has had particularly unfortunate experiences with government consolidations. Six Toronto area local governments were forced to consolidate by the province in the late 1990s, with claims of $300 million annual savings. There was broad business support, though the residents of each consolidating jurisdiction had voted more than two-to-one against consolidation in advisory referenda.

Twelve years after the fact, even proponents are expressing second-thoughts. The city’s major downtown business organization has noted that the anticipated savings did not occur and that the consolidated city would be paying the higher price of consoli- dation for years to come. Rather than reducing the number of employees, the city has added more than 4,000. As in neighboring Hamilton, a city with population of more than 500,000 that was also forced to consolidate, there are calls to restore the previ- ous smaller governments. A forced consolidation in Halifax, Nova Scotia brought higher local taxes and spending per capita, despite the before-the-fact claims to the contrary.

But the problems of local government abolition and consolidation are not limited to far-away places. The favorite local govern- ment consolidation of proponents is right here in Indiana — Indianapolis. Mayor Ballard’s 100 Day Report in 2008 indicated that Indianapolis “has lived beyond its means in recent years, and it is on an unsustainable financial path.” The consolidated city has managed to run up a net (unfunded) pension and post-retirement liability of approximately $1 billion. This is after borrowing $100 million in 2005 to pay down the unfunded pension liability. The obligation for approximately $1 billion of future police and fire pensions has now been assumed by state taxpayers. Indianapolis is indeed a model. Indianapolis shows that large, consolidated governments can become “too-big-to-fail,” leading to state bailouts.

It is important to recognize that none of the talented and commitment architects of the Indianapolis “Unigov” intended these consequences, nor did any of the subsequent political leadership. The challenge of maintaining sufficient financial control over larger governments is daunting.

Where governments are smaller, elected officials are able to exercise more direct oversight, which greatly increases their ability to actually control spending. Elected officials are closer to the people in smaller governments and they are far more accessible to voters. Residents can actually reach their elected officials on the telephone or even in person, as opposed to dealing with a staff member whose career does not depend on attracting voters in the next election. In larger governments, voters have considerably less access to elected officials. Moreover, where there is less access for voters, well funded interest groups have greater access.

When governments are consolidated, differences between labor contracts, pay scales, operating procedures and service levels must be eliminated. It is not surprising that virtually always means that costs rise, because, for example, unions and employees are unwilling to accept lower pay and less time off, and residents are reluctant to accept lower service levels.

This is a particular risk in Indiana, where the abolishment of townships would ultimately lead to the eventual replacement of the many volunteer fire departments in more lightly populated areas with the career fire departments typical in urban centers. This could raise taxes statewide by $400 million to $1 billion annually.
If taxes are too high in Indiana, too many local governments are not the problem. Only 14 states have more governments per 10,000 people than Indiana. Yet, 32 states have higher taxes per capita. Indiana’s generally lower taxation per capita is, at least partially, the result of its more intense local government and the fact that local government is closer to the people.

It is time to send the ivory tower studies to the archives. The theoretical savings they predict are so disconnected from the reality as to be absurd. Virtually all of the “after-the-fact” experience shows that local government abolition and consolidation leads to higher not lower taxes and spending. In this reality, townships are not a liability, they are an asset to Indiana.

Wendell Cox is principal of Demographia, an international consulting firm in St. Louis and is a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris. He has produced a number of reports on local governance and local government finance, including “Government Consolidation in Indiana: Separating Rhetoric from Reality” (for the Indiana Township Association).