When bigger isn’t better

During the past decade, forced municipal mergers occurred in Ontario, Nova Scotia and Quebec. In each case, there was significant local opposition. Referenda were held in many of the former cities and merger plans were soundly rejected by voters, but they went ahead anyway. The people – in whose name all of this was to occur – were effectively told that they had no say.

Thankfully, the trend may be turning. Internationally, withdrawal movements have gained momentum – though not yet prevailed – in Oakland, California, Boston, Los Angeles and Gothenburg, Sweden’s second largest city. Now, citizens in Quebec are taking the fight one step further.

The former Parti Quebecois government adopted its merger law in December, 2000, and the new cities were officially born in January, 2002. The City of Montreal and 27 former suburban municipalities on the Island of Montreal were amalgamated into a new megacity divided into 28 boroughs. The same process occurred in Quebec City and in other urban centres across the province. All told, 212 municipalities were merged into 42.

The provincial Liberals opposed the forced mergers at the time, and promised to allow citizens in the former municipalities to undo them. Since forming government, they’ve backtracked somewhat. Bill 9, which allows municipal de-mergers via referenda, was adopted last December, but it states that reconstituted municipalities would not get back all the powers they used to have.

The new megacities would continue to manage regional infrastructures and some collective services, leaving the citizens of the revived suburban entities with less autonomous powers and also less influence on issues of regional interest. This has prompted some former foes of mergers to reconsider.

Still, referenda will be held this weekend in 89 out of 212 former municipalities which met the criterion of 10% of citizens requesting them. Although the process has accurately been criticized as biased toward the status quo, this is nevertheless an important development that will be watched closely by those in others jurisdictions with similar ideas.

There is indeed good reason to be suspicious of the political consensus in favor of larger municipal governments. Most notably, their cost-efficiency justification rests on the faulty premise that bigger is better. The studies commissioned by ministries and politicians bent on amalgamation always produce results that revolve around this notion, but the reality is that larger units of government do not cost less – they cost more.

What advocates of mergers fail to do is look at the actual data. Research in the United States illustrates the point.

There are 10 city-county consolidated governments in the U. S. that have, at one point or another, had more than 500,000 residents. That includes New York City. It might be expected that, as the largest consolidated government in the country, New York would have government expenditures among the lowest per capita. But not so: As the table printed on this page shows, they are among the highest.

One amalgamated city where they’re even higher is San Francisco, where expenditures per capita are 154% higher than in California counties that have not been consolidated. Even worse is Baltimore, where expenditures per capita are 174% higher than the average of all other local governments in Maryland. On average, the 10 large consolidated governments have expenditures per capita 57% above that of all other local governments in the corresponding states. In only two of the 10 cases are consolidated costs lower, and even then not by much (New Orleans at 1.3% and Jacksonville at 8.7%).

Based on information from the United States Census Bureau database for 2000, a sample of more than 700 municipalities was reviewed. The sample was divided into quintiles based on population. The highest municipal expenditures per capita were in the quintile with the largest population. The lowest costs were in the second and third quintiles, where populations averaged 38,000 and 71,000, respectively. The fourth and fifth quintiles, with even smaller population averages, had somewhat higher municipal expenditures – but still not as high as the largest municipalities. So much for the theory that larger governments have greater “economies of scale” that drive down costs.

Indeed, the only “economies of scale” in larger governments are those faced by special interests, which find it easier to exercise control than when governments are smaller and more fragmented.

One such interest, government employee unions, usually does very well in larger municipalities. In the United States, virtually the entire cost difference between the largest governments and medium-sized ones is accounted for by higher pay for public employees.

There are functions that need to be administered regionally rather than locally, including highways, public transit and air pollution control. But many others don’t need to be administered anywhere above the neighbourhood level. Some of the world’s most successful metropolitan regions have highly fragmented governments – including Tokyo, the world’s largest metropolitan area, which has more than 225 municipalities that stretch through parts of four provinces.

The best guarantee of effective local government is a populace with a strong stake in its performance. In smaller jurisdictions, individual citizens or neighbourhood groups can provide important counterbalances to interests that attempt to siphon off resources to meet their own agendas; larger governments are harder for the citizenry to control.

In Ontario, Mike Harris’ Conservative government got Toronto’s amalgamation all wrong. If it had looked properly at the available evidence, it would have made 20 cities out of the pre-existing seven – not thrown everything together into a megacity that can only, in the long run, make things worse for the average citizen.

Many other governments have made similar mistakes. But with this weekend’s vote, Quebec has a chance to get it right.

Wendell Cox is Associate Researcher at the MEI.