Cost-sharing among ways Vermont cities and towns could save money

Vermont towns could benefit from merging emergency services, a reports shows.

Vermont towns could benefit from merging their emergency services, a new report shows.

Vermont has a high level of local government efficiency, according to a report from the Federal Reserve Bank of Boston that studied the “fragmentation” of New England cities and towns. But with about 117 local governments per 100,000 residents, there may be room for improvement. And the author didn’t include information about education efficiency.

The report — “The Quest for Cost-Efficient Local Government in New England: What Role for Regional Consolidation?” — examined the ways municipalities can save money and improve efficiencies by consolidating emergency dispatch call centers, public pension administration and local health departments.

Yolanda Kodrzycki, the author of the study and director of the New England Public Policy Center, analyzed data from the 2007 Census of Governments and the 2010 census to rank the six New England states according to how fragmented their local governments and services are — or, how many local governments there are in each state per capita and per mile.

Kodrzycki focused on low-hanging fruit for government savings: arenas of local government services that cost the most, have been proven to generate economies of scale when shared among municipalities, and therefore offer the best potential for cost-savings.

Vermont performed well in the region and even across the nation with one of the least fragmented systems for public safety call centers, and a fairly well consolidated public pension system.

Steven Jeffrey, exceutive director of the Vermont League of Cities and Towns. VTD/Josh Larkin

Steven Jeffrey, exceutive director of the Vermont League of Cities and Towns. VTD/Josh Larkin

But it’s very difficult to compare such figures across state borders, said Steven Jeffrey, executive director of the Vermont League of Cities and Towns. He pointed out that without local health departments, per se, in Vermont, the state’s rank of having the 10th most-fragmented system has little meaning.

And there are plenty more ways to save money the report didn’t examine, Jeffrey said — strategies that cities and towns around the state continue to dabble in and debate.

To share or not to share

The first question for cities and towns considering sharing services is not so much “what” but “whether.”

Several advantages and disadvantages of service-sharing are outlined in the report.

For example, “localities are able to distinguish themselves from one another by providing distinct combinations of public services and taxing structures.” However, decentralization can drive up the costs of providing services, because local governments miss out on economies of scale.

And on the one hand, in the case of diminished support from state or federal governments, decentralized local governments can exacerbate inequality because people cluster by income based on their ability to pay for the local services. On the other hand, local variation lets people live in a place they can afford.

But there’s more at stake than money, says Ernie Saunders. He founded the New England Municipal Resource Center in 1986 to help cities and towns take advantage of emerging computer technology.

“If we lose faith in local government, we’re really in trouble.”

Ernie Saunders, New England Municipal Resource Center

“I could tell the personal computer would make a big difference for municipalities,” he said. He started with four towns as clients. Today every tax bill in the state is generated from NEMRC’s software, Saunders said.

The company specializes in programs that cities and towns use to manage themselves: budgets, payroll, planning & zoning, voter checklists, animal licenses and more. Rather than every town reinventing every wheel, they can simply clone what already works. It’s an affordable way for many small towns to provide high-quality services, he says.

Helping local governments operate efficiently is a mission for Saunders. Providing tools to that end is not just a business for him; it’s a strategy to help cities and towns resist centralization.

“You won’t get me to say that we should consolidate,” Saunders said. “The patchwork quilt of 280 or so local governments (in Vermont) is a lot. But in my way of thinking, people have lost faith in the federal government, and the state is too big. If we lose faith in local government, we’re really in trouble.”

He coined the term “coordinated autonomy” to describe what Kodrzycki’s report suggests.

Acknowledging the strong tradition of “home rule” and local control in New England, Kodrzycki is careful to underscore that her report explores what localities can do to share responsibilities and resources while maintaining their identities.

What to share

Aside from Vermont’s conversion to a statewide 911 system in the 1990s and ongoing consolidation of public pension systems, Jeffrey said he’s noticed other cost-saving experiments from his work with the state’s cities and towns.

The cities of Montpelier and Barre and the towns of Barre and Berlin currently are exploring the option of consolidating their public safety operations.

Managing public safety and public works is expensive for towns, Jeffrey said, “particularly when you get into services that involve big toys” such as road graders and ladder trucks.

“On the other hand, you’d hate to have your fire truck on a call in another town when you need it,” he said.

Likewise, even non-emergency equipment can be hard to share. In the event of storm damage to roads, each town sharing a road grader likely would consider its own needs a priority.

George Malek of the Central Vermont Chamber of Commerce, who’s helping to coordinate an inter-municipal committee looking into the option, said they’re two to three months from completing a report to bring back to their respective councils.

The “circuit rider” approach is a similar strategy, but for personnel.

“A circuit rider would be somebody who would work for three or four towns,” Saunders explained. “Some towns need to have a town manager type position, but they’re just too small,” he said. Property assessors are another position many small towns have trouble funding full-time.

Saunders thinks there’s a lot of promise in the circuit rider concept, but he admits it’s a “hard sell” for local residents who want to be sure their tax dollars are paying for their fair share of a common resource.

Less give and take is needed for coordinated purchasing. Jeffrey said the state opened its own bidding process to cities and towns many years ago, allowing municipalities to add their own needs to the state’s open bids for things like police cruisers, snow plows or road salt.

“That’s consolidating services without consolidating entities,” Jeffrey said.

It also can be applied to a much more contentious realm of state government: schools.

“Among the New England states,” Kodrzycki wrote, “the share of local budgets devoted to education ranges from about one-half in Massachusetts to about two-thirds in Vermont.”

Yet the lightning rod topic is conspicuously avoided in the report — not so much because it’s controversial, but because the literature about it shows mixed results.

The jury is out on consolidating schools, Kodrzycki said. Consolidating or sharing certain school functions such as administration, information technology or purchasing, however, clearly can be beneficial.

Regardless of the method for cost savings, the continuing downward pressure on local government budgets may inspire some communities to strike up new relationships with their neighbors.

Due to recessionary woes, lower property values and reduced federal support, Kodrzycki wrote, “Revenues to fund local government operations are expected to remain constrained for the foreseeable future.”

Hilary Niles

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