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Mergers of RMs ignorant

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IN the Manitoba legislature, Bill 33 is called the Municipal Modernization Act. Local Government Minister Ron Lemieux has been called a bully for his aggressive timetable with this bill, so much so he was recently forced to apologize for calling his critics "insolent children." But any talk of bullying misses a larger problem: The premise of the bill itself is just plain ignorant.

Free Press columnist Dan Lett describes forced amalgamations as "a no-brainer." However, many brains with expertise on the subject disagree. A CD Howe Institute paper called the fetish for forced amalgamations a "discredited 19th-century ideal." University of Western Ontario professor Andrew Sancton studied seven smaller Ontario municipalities that were caught up in forced amalgamations and found voters in only one (the largest) of those jurisdictions believed the mergers delivered better value for money three years later.

Provincial governments have a funny way of deciding they want to merge some municipalities and then funding studies that miraculously justify that policy. Among independent researchers who study local-government finance, however, the idea that forced mergers magically create efficiency is about as popular as climate-change denial is for climatologists. In a telling sign of prior experience with the matter, British Columbia's Community Charter actually makes it illegal for the province to force municipal mergers.

The financial consequences of this simplistic policy usually follow a predictable pattern, no matter how large or small the unwilling partners involved.

First, staff salaries almost always rise. In smaller mergers, contract work quickly shifts to permanent, full-time, unionized staff (which may explain the NDP's passion for this issue). In merged communities with one or more collective agreements in force, lower-paid workers quickly demand "fairness," which means higher pay and benefits to catch up to their co-workers.

Once merged, larger municipalities can take on debt more easily, and they do -- often leading to a binge of construction by governments poorly equipped to manage regional-level infrastructure projects.

Next, management pay rises. A village might get by with a CAO who was more "administrator" than "chief." After a merger of two or three villages, suddenly there's demand for a more professional CAO, more departmental staff, and higher pay to match.

Meanwhile, the promised savings usually vanish. For example, the province argues it should be easy to save money by reducing the number of councillors once the merger is done. But in the public sector, few things are as cheap as a rural municipal councillor. Shrink a merged council by two-thirds, and it usually takes no more than an election cycle for the survivors to vote themselves far more pay and a larger budget to match their expanded responsibilities.

Consider the case of the province's poster child for successful amalgamations: Killarney-Turtle Mountain. It's held up as proof that amalgamations can work. But it's a lousy comparison, because their amalgamation was voluntary. A voluntary process means both sides are motivated to find compromises rather than protect their turf.

In fact, in Killarney-Turtle Mountain, local leaders have had experience sharing selected services for almost 40 years before their final merger. Their success at cross-boundary service partnerships is the model the province should be promoting. Some local-government economists argue that as little as 20 per cent of municipal services can benefit from economies of scale. With more service-sharing in a few key areas, tiny municipalities could deliver better outcomes without pointless restructuring.

For example, one excuse for Bill 33 is that some tiny municipalities didn't have enough cash to fund audits, so they missed out on $12 million in federal gas-tax rebates. If this is a problem, why not create regional pools to share these costs instead? Or the province could hire a few auditors and charge back costs against any rebates collected. Is a vast series of forced mergers really the rational solution to the absence of a few accountants?

Don't forget: On a forced timetable, the act of amalgamation itself isn't free. Severance costs appear, leases may be broken, lawyers engaged, consultations held and so on. Compare Manitoba's current plan with Ontario's amalgamation binge just over a decade ago. Even the penny-pinching Harris regime set aside funds to help some municipalities cover transition costs. Not so much here. The "infantile children" won't just be forced to amalgamate on Mr. Lemieux's timetable. They'll be forced to pay for it, too.

So, with some experience in the matter, I'm not convinced forced rural amalgamations are "a no-brainer." But even if you disagree, ask yourself this: If government efficiency is such an urgent priority for the Selinger government, why isn't it first proving that point in its own backyard?

 

Brian Kelcey blogs at stateofthecity.ca

Republished from the Winnipeg Free Press print edition July 10, 2013 A9

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