IS STRIVING FOR GOVERNMENTAL CONSOLIDATION WORTH THE EFFORT?

This past week Kent Gardner, director of economic analysis for the Center of Governmental Research,Inc., addressed the Thursday Morning Roundtable. His talk centered on the advisability of consolidating local governmental entities. He urged great caution before undertaking the merger of counties, cities, villages and towns. Gardner said: "Consolidation is immensely complex, very time-consuming and also very distracting." He said further that costs must be faced early on and the benefits are on the horizon.

Gardner's speech undoubtedly served to throw cold water on the efforts of those in Central New York who see no sense in operating countless duplicative or overlapping governmental functions carried out by the County of Onondaga, the City of Syracuse, nineteen towns, and fifteen villages. While at the opening of Gardner's talk, he conceded that the messy structure that now exists would make little sense were our community able to start from scratch in the 21st century instead of laboring under a system tailored for the needs of the 19th, he argues in essence that we are stuck with our inheritance and might as well continue to hope that local officials, left to their own devices, will do the right thing.

Gardner's observations about the difficulty of bringing about any major change can not be challenged. Present office holders whose jobs would be placed in danger of elimination by merger would be energized into opposition. Their efforts would find support and funding from public employees' unions. Legal hurdles are imposing. In order to effectuate a merger of the County of Onondaga with the City of Syracuse there would have to be approval by referundum vote of all residents of the towns and villages as well as all the inhabitants of the City. Anyone who has lived in this area for some time is aware that getting the towns to enter into a partnership with the City on any endeavor is no easy task.

Virtually all of the cities in New York State are in deep financial trouble. Erie County and the City of Buffalo face even more dire economic challenges than are confronted by the residents of Central New York. In an attempt to avoid fiscal disaster, Erie County Executive Joel Giambra has appointed a prestigious citizens committee known as the Greater Buffalo Commission that favors the absorption of Buffalo's government into the County of Erie. While this effort is backed by many business and community leaders, it is facing substantial opposition from influential elected officials. Whether the proposal advanced by the Commission will ultimately gain approval in its present or revised form no one can safely predict. However, the proponents of consolidation have set the wheels of change in motion and the knowledge gained by this effort will bring Erie County long term benefits.

Gardner's talk was instructive. It provided proponents of merger with a dose of realism. Where I strongly disagree with him is in his implied conclusion that we should not even bother to study whether the wholesale or selective consolidation of governmental services makes sense. To adopt his thesis would mean continued acceptance of a system that is weighted down with waste and conflict. A start would be for our City and County elected officials to set up a commission along the lines of that which has been established in Erie County. Such commission would be charged with developing a blueprint for local government equipped to meet the challenges faced by Central New York today. The commission will need a professional staff to unravel the complexities referred to by Gardner. The project will necessarily be ongoing and if it is to succeed it will have to receive the backing of community leaders. There will be no quick fix but a modern, responsive system of local government can be a reality if all those who see the need for consolidation perservere.

County and City In Conflict About Downtown Hotel --- More Talk of Governmental Consolidation

In County Executive Nick Pirro's piece in the Post Standard (1/23/2005), he faults Mayor Matt Driscoll for refusing to grant 25 years of real estate tax forgiveness to the developer of the proposed new hotel that is planned to service the Oncenter . Matt, on the other hand, wants the County or the developer to guarantee that the City will not lose more from the lack of real estate taxes than it will gain in sales tax revenue and income from the convention center garage.
No doubt both men believe in good faith that their hard line positions are justified by the financial difficulties faced by their constituencies. The County has to deal with rising welfare and medicaid expenses mandated by the State. The City suffers from a greatly underfunded educational system, aging housing stock and an ever shrinking real estate tax base.
Finger pointing by Nick accomplishes nothing. The question comes to mind why was Matt left out of the discussions between the County and the developer when they were first initiated? The City is a major stakeholder. Instead of inviting the City's input, the County chose to come to an understanding with the developer, run what was agreed upon through the County legislature, and then tell the City it must take it or leave it. The City, being asked to gamble millions of dollars of revenue over a twenty five year period based upon the County's questionable economic forecast, quite naturally says, in effect, not so fast.
Nick also says that there should be a merger of such City and County functions as economic development, purchasing, information technology, accounting and tax collection. In the abstract, he is of course correct. He might also add to the list police protection and roads and streets. He says the City has refused to even discuss consolidating economic development. If this is so, clearly something is seriously wrong. Both Nick and Matt have publicly proclaimed their support for the concept of governmental consolidation at the local level. What then is the basis for the impasse?
Is Matt concerned that the departments that Nick proposes to take over are so extremely important to the independence of City government that they must be retained? Is Matt worried that his political powers will be greatly diminished if County government is given the power to decide which vendors shall do business with the City? Would a County controlled office of economic development development tend to favor the location of new businesses in the towns rather than within the City? At what point would the City have transferred out so much of its intellectual property that the Mayor would be almost totally subservient to County government?
There is no doubt that at this point in the twenty-first century one entity should replace County and City governments that are too often duplicative and at cross purposes. Piece-meal changes will take forever. There needs to be a total merger from top to bottom.. Such a substantial change in governmental structure requires farsighted leadership on the part of the County Executive and the Mayor as well as the full support of our representatives in Albany who will have to sponsor statutory changes to expedite consolidation. It is a daunting task but it can be done. In the meanwhile, it is important that Nick and Matt return to the negotiating table and keep talking.

GOVERNMENTAL CONSOLIDATION --- MAKING THE LEAP FROM RHETORIC TO REALITY

It was a little more than a month ago that County Executive Nick Pirro and Mayor Matt Driscoll were touting the virtues of consolidating County and City governmental services. Matt was setting up a series of meetings with representatives of all municipalities in Onondaga County. It was hoped these elected officials would reason together to bring about the elimination of duplicative and wasteful functions. The expressions of vision and cooperation were high minded. Of course, since virtually no
consolidation of a major function of city and county government had ever taken place anywhere in New York State, the likelihood of early success could hardly be viewed with optimism. Then with the first real challenge, i.e., the apportionment of monies created by a 1% increase in the sales tax, early expressions of good will turned into acrimony. Matt wants the City to receive 25% of the estimated 65 million in new monies to be collected, the same percentage it receives under the sales tax distribution formula now in place. Nick has taken the position that the sales tax is a county tax and the City should be happy to receive the 8 million the County legislature has decided it deserves.

Behind this dispute are a number of factors that have not been part of the public debate. One of course is political self interest or survival. Elected officials generally vote on the basis of what they see as an immediate advantage to their constituents, even though a broader vision might bring about a better long term result for the people they represent and the wider community as well.

A related consideration can best be described as the unwillingness of elected officials to relinquish turf. As an example, Nick has claimed that County has offered to consolidate purchasing, economic development and data processing which he argues if accepted by the City would have saved it up to a million dollars (PS 4/29/04). Nick admits these changes would be modest but could constitute a step forward. Since these proposals were ignored or rejected by both Democratic Mayor Driscoll and his Republican predecessor Roy Bernardi, party affiliation does not seem to be the problem.. A factor at work undoubtedly has to do with patronage or control over hiring and firing. Nick says in his letter to the Post Standard (4/29/2005) that County financial aid must be accompanied by County participation in how the money will be spent. What is meant by “participation” has not been spelled out. Is Nick suggesting that the County would totally take over these functions in exchange for the million dollar cost savings to the City or will a good faith effort be made to consult with the Mayor in the hope that he will insist that those running any newly created consolidated purchasing, data processing and economic development departments be staffed by highly qualified and impartial professionals?

Nick rightly points out that local governments are in great need of a new business model. Any such new structure must necessarily involve a transfer of resources and control to and from existing governmental subdivisions. In my view, the most sensible solution would be to take a giant step by planning now to merge City government as it presently exists with the surrounding towns and create a new greater metropolitan Syracuse. Of course, it would be hard to find a town official today who would not strongly resist even the suggestion of such an idea. After all, more than one out of five City residents live below the federal poverty level while in the towns that number is less than one out of twenty. Any legislator representing a financially healthy town who proposed merging with the near bankrupt City of Syracuse would soon be turned out of office.

With these factors in mind, a two pronged approach seems to be the best course. In the short run, Nick and Matt should put an end to name calling and perhaps with the aid of an experienced mediator hammer out an agreement on the sales tax distribution formula that they can present to their respective legislative bodies. Both should be mindful of the Native American maxim which says in substance: “I shall not criticize another until I walk a mile in his moccasins.” Each should become fully acquainted with the serious fiscal problems faced by the other and try to work toward a new era of cooperation that will replace ancient barriers with mutually beneficial constructive solutions. Mayor Driscoll could take a first step by accepting County Executive Pirro’s offer to take over purchasing, data processing, and economic development functions. It would be Nick’s task to commit to Matt that these agencies will be staffed with impartial professionals who would work for the benefit of both governments.

As for the long run, it seems to me that a total merger of all local governments is inevitable if we are to develop the kind of business model needed to bring maximum benefits to our region. Such a sea change would seem to be at least five to ten years away. But our leaders have a unique opportunity to seek counsel from the highly regarded Maxwell School of Public Administration at Syracuse University. With this kind of support available, the City and County can join together in undertaking a long range planning program to create a new governmental structure equipped to meet the demands of the twenty-first century.

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An Innovative Message from the Office of the County Executive --- But does his Proposal Fairly Address the Financial Problems of the City, towns and villages?

The March 1, 2004 message from Onondaga County Executive Nick Pirro to the Legislature contains a number of proposals which purport to improve the economic viability of Onondaga County and the entire Central New York region. (It can be found on the web at www.ongov.net.)

This was no business as usual address. Confronted by a County budget imbalanced by an anticipated $50 to $55 million deficit largely brought about by State mandated Medicaid and pension costs, Mr. Pirro had to choose between severely cutting services or looking for new sources of revenue. At a time when our community is actively competing to create job opportunities by attracting new business, it would be counter productive to slash services and thereby reduce the quality of life of its citizens. Our excellent park system, first rate zoo, and well attended cultural events are publicly supported attractions that enrich all of Central New York and provide selling points for those engaged in promoting the area’s economic development.

The County Executive has recommended that additional revenue be raised by imposing a 1% increase in the local sales tax. This option has long been resisted by governmental and community leaders. However, in the present difficult economic climate, it appears to be the least painful revenue source. If enacted by the Legislature, it will bring the combined state and local sales tax to 8 1/2 %, an amount already in effect in Monroe, Erie, Albany and nearby Cortland and Tompkins counties. With our property tax the highest in New York State, the County Executive correctly elected to seek a portion of the needed revenue from those who live outside of Onondaga County but utilize our roads and other public services.

There is a hitch, however, with respect to the manner in which the sales tax collections will be distributed. Unlike proceeds obtained under the existing formula which shares the collections with governmental subdivisions of the County, here Mr. Pirro would have all of the proposed increase retained by the County. The financially strapped City of Syracuse is entirely correct in objecting and demanding that any new revenue from this source be allocated on the basis of the present distribution arrangement.

Perhaps the most significant part of the message is the recognition that our community is a world apart from where it was a couple of hundred years ago when our political boundaries were established. Mr. Pirro points out that as recently as two generations ago the City of Syracuse contained almost all of the area’s residents, industries and commerce. Today, more people currently live in the four towns of Cicero, Clay, Manlius and Salina than in the City of Syracuse. Over the past four decades City government has been on the decline in importance while the influence of County government has risen.

The message to the County Legislature and other governmental subdivisions is that the old formulas need reexamination. In many instances, one agency can more efficiently do the tasks now being performed by two or more. Mr. Pirro has renewed his proposal that the County Purchasing Department take over the purchasing needs of the City thereby saving Syracuse taxpayers $400,000 annually. The City administration has in the past rejected this idea. Mayor Driscoll and County Executive Pirro should be able to sit down and work out the details of such a transition that would bring about a cost saving but retain the City's governmental integrity. Similar logic favors the consolidation of the economic development, accounting and data processing offices of the City and County. Other areas that invite consolidation are in the categories of parks and recreation, roads and law enforcement. But these are big ticket items and before any major changes can take place in these areas, there will have to be a groundswell of public support for meaningful change. No such movement is presently on the horizon.

Nick Pirro's proposal would at least seem to move local governments away from a state of complacency. There will be an ensuing debate and this will hopefully bring about some recognition that the old ways of doing things no longer work.

Geographical imbalance continues to be the rule in County law enforcement

Onondaga County will install a Sheriff's substation in a new town hall to be constructed in the Town of Onondaga (Syracuse Post Standard-11/19/2003). No substation is being planned for the City of Syracuse where most of the violent crimes are being committed.

One reason for this strange order of priorities is the tradition, established in the horse and buggy days, that the Sheriff never makes arrests in Syracuse, even though Syracuse taxpayers pay their fair share of the operational costs of the Sheriff's office. This is the outgrowth of a nineteenth century system that created multiple county, city, town and village law enforcement agencies. Apart from the issue of whether, in light of today's realities, this proliferation of police agencies is equitable, most will agree it is certainly duplicative and wasteful.

Rapid changes are taking place in the world around us. The Mayor and the County Executive have recently voiced their support for the consolidaton of municipal services. Erie County, confronted with the prospect of the bankruptcy of the City of Buffalo, is moving in the direction of merging the Buffalo police department with the County Sheriff's office. Syracuse and Onondaga County, facing depleted financial resources, would be well advised to do the same.

Alternative to increase in County real property tax

In Onondaga County Executive Nick Pirro's message accompanying the proposed 2004 County budget, he alludes to mandated expenses imposed by New York State that require him to recommend to the legislature a raise of 9.5% in the real estate tax. It is estimated that this increase will bring in the $21 million needed to cover the State-mandated costs largely attributable to Medicaid, pensions, and legal representation for the indigent. If this budget is adopted, the owner of a house worth $100,000 will have $82 added to his or her tax bill.
Compelling reasons undoubtedly exist for raising revenue. However, in my view, there is an alternative which I believe will be somewhat less painful than real estate taxation and which can provide revenue not only to the County but to the City, the towns, and school districts as well.
The County currently imposes a 3% local sales tax which, when added to the 4 and 1/4 % state sales tax, totals 7and 1/4% in all. Onondaga is unique among the major upstate counties in limiting its sales tax to 3%. Erie, Monroe and Albany counties all impose a 4% local sales tax. In fact, 34 counties and New York City all have a sales tax above the 3% rate restriction. While increasing the local rate above the 3% limit requires the consent of the New York State legislature, approval is granted on a pro forma basis when requested by a county.
Such a 1% sales tax increase will raise about $65 million locally. Of this, about $26 million would go to the County, $16 million to the City, $19 million to the towns and approximately $4 million to the school districts. This would give the City a needed infusion of money to be spent largely on educational needs and crime prevention. The County could meet its shortfall and still have some money left over to be placed in reserve or to reduce rather than increase the real estate tax rate. The towns and school districts would have similar options. Last but hardly least, sales taxes are paid in part by non-residents of Onondaga County who use our highways and rely on other governmental services when they come here to visit our zoo, watch a ballgame, attend a cultural event or shop at one of our regional malls. The sales tax approach distributes the financial burden more fairly. It is worth a serious look.

The City Abstract Is A One-Sided Document And Should Be Revised or Abolished

All real property owners in the County, whether they live within or outside the City, pay to the County of Onondaga a tax based on the value of their property. They also pay a real property tax to support the government of the City of Syracuse. Furthermore, each City landowner pays approximately $300 in addition to the County than does his suburban and rural counterpart by virtue of an oddity known as the City Abstract.

The origin of the City Abstract is said to go back some thirty years. The County charges the City for certain services the County claims enefit only City residents. In the 2003 budget, the following charges were imposed upon City real property owners: about a million dollars representing the City's share of the cost of maintaining the Public Safety Building, some five million dollars computed to be the County's cost tp operate the City branch libraries, four million dollars to reimburse the County for housing City prisoners prior to arraignment, and roughly another two million for the City's share of the cost of the Syracuse/Onondaga County Planning Association, the City-County Youth Bureau, the Commission on Aging and the cost of collecting Abstract charges.

The charges the County imposed on the City in the 2004 budget year is increased as the City begins making payments on its 49.6 percent occupancy of the 28 million dollar new downtown Courthouse on S. State Street. The first yearly payment the City iss making amounts to some 1.7 million dollars. The City will also pay the County for the major portion of the cost of the County-operated crime laboratory amountiing to 1.6 million dollars a year. This is said to be justified because some eighty one percent of the lab's cases come from the City.

What is wrong with the imposition of this added tax upon those who live in the City? Let us look at the formula for sharing the cost of maintaining the downtown builidings utilized for criminal courts and the housing of prisoners awaiting arraignment. Expenses arising out of these functions amounted last year to some five million dollars which amount was passed on to City residents on the Abstract. A larger amount is being imposed onto the City in the present budget year. Admittedly, many more crimes are committed in the City than in the towns and villages. No one can doubt that this fact contributes greatly to the utilization and cost of operating the community's criminal justice facilities. However, the higher crime rate can be traced to the fact that a much larger proportion of poor and socially disadvantaged persons inhabit the City than any of the the surrounding towns. This is borne out by the 2000 federal census. The per capita income of Syracuse residents was $15,168 per year. The average per capita income of individuals living in the nineteen towns was $23,685, a difference of $8,518 per year.

So when the County charges the City for what amounts to costs attributable to poverty, it is in effect relying on geographical boundary lines to unfairly surcharge the City for social costs that should be shared by the wider community. Stated another way, the City, in the process of housing the poor, loses much of its tax base due to the low assessment value of its many run-down neighborhoods. Yet it is obliged to underwrite a larger police force than would be necessary if it were dealing with a more stable and affluent population.

I believe the City Abstract is a one-sided document for other reasons. It cannot be disputed that City taxpayers pay for a Sheriff's Department that makes no arrests in Syracuse, a County Transportation Department that repairs only roads in the towns and a County Parks Department that maintains none of the City parks. Why then should not the many millions of dollars paid out by City taxpayers to the County for governmental services for which they receive little or no benefit appear on the City Abstract as a credit in favor of City residents? The present City Abstract formulation denies City residents Equal Protection of the Law. If the County Legislature is unwilling to corrct this injustice, perhaps the City of Syracuse should consider turning to the Courts for justice.