Our lives have definitely been changed by the inventions of the light bulb, telephone, automobile and computer, but local governments are structured and operate pretty much the same way they did during the era of horse-drawn transportation. Today, that structure in many states is costly and inefficient and a few states are beginning to take a hard look at local governments as a way to reduce costs and improve service delivery.

In an effort to reduce taxes and improve the delivery of government services former New York governor, Eliot Spitzer signed an executive order a year ago establishing the New York State Commission on Local Government Efficiency and Competitiveness. The commission delivered its final report last month as required by the executive order. Earlier this week, Governor David Paterson announced Program Bill 52, which lays the groundwork for local government reform by implementing many of the recommendations made in the report. The governor had previously released $3.6 million in state grants to 43 counties to study the more efficient assessment, collection and enforcement of taxes. The grants included funds for the implementation of county-wide tax databases.

The commission estimated there were over 4,700 local governments in the state. However, the U.S. Bureau of the Census puts the number at just over 3,400:

Whichever number you use, and the different totals may just be a matter of definition, it's a lot of local governments. The 2007 Census of Governments ranks New York 9th in number of local governments behind only Illinois, Pennsylvania, Texas, California, Kansas, Missouri, Ohio and Minnesota. The commission reports that most municipalities were established during the era of horse-drawn transportation and have not kept pace with changes in population, infrastructure and the economy.

The final report made several recommendations that would affect the very jurisdictions you may be doing business with today, presenting both opportunities and challenges. Some of those recommendations were:

• Centralize services at the county level such as assessing, tax collection, emergency dispatch, civil service, and vital records
• Allow counties to share jail facilities
• Encourage local governments to share services
• Require local governments to consider county-level management of fire protection
• Empower the Commissioner of Education to order consolidation of some school districts
• Facilitate the consolidation of educational back-office services and regional high schools
• Improve local financial data for benchmarking
• Continue the grant program that encourages local governments to consolidate and share services

The commission also monitors initiatives local governments are currently undertaking, including purchasing and procurement and technology services coordination and consolidation.

Don't expect consolidation of local governments and the sharing of services to occur without a fight. In New Jersey, over the last 30 years there have been at least 9 studies, all recommending merger or consolidation. Not much has happened, though Governor Corzine is trying to force change through the reduction of state aid.

Update: On May 2, Sen. George Winner (R-Elmira) announced an additional $13.7 million in grants to 67 municipalities under the Shared Municipal Service Incentive (SMSI) program.

Gain more insight into doing business with local governments at INPUT's 3rd Annual State & Local MarketView event on June 4, 2008 in Tysons Corner.