Merging county administrations – cross-national evidence of fiscal and political effects

ABSTRACT

While many central governments amalgamate municipalities, mergers of larger county administrations are rare and hardly explored. In this article, we assess both fiscal and political effects of county mergers in two different institutional settings: counties act autonomously as upper-level local governments (Germany), or counties being decentralised branches of the state government (Austria). We apply difference-in-differences estimations to county merger reforms in each country. In both cases, some counties were amalgamated while others remain untouched. Austrian counties (Bezirke) and German counties (Landkreise) widely differ in terms of autonomy and institutions, but our results are strikingly similar. In both cases, we neither find evidence for cost savings nor for staff reductions. Instead, voter turnout consistently decreases in merged counties, and right-wing populists seem to gain additional support. We conclude that political costs clearly outweigh fiscal null benefits of county merger reforms – independent of the underlying institutional setting.     

Political Fragmentation and Fiscal Status: Evidence from Municipalities in Israel

Abstract

This article analyses the link between fiscal balance and political fragmentation. While a large body of literature states that political fragmentation leads to fiscal deficits, others suggest that political fragmentation is associated with political competition, which tends to improve fiscal balance. These hypotheses are tested using budgetary and political data of municipalities in Israel for the years 1998–2006. The results suggest that both hypotheses may be correct, depending on voting behaviour. In Arab municipalities, where residents vote according to clan affiliation, low levels of political fragmentation are associated with large debts. On the contrary, in Jewish municipalities, low levels of political fragmentation are associated with small debts, since in these cases, coalition formation requires less spending and is easier to sustain.     

How do municipal amalgamations affect turnout in local elections? Insights from the 2015 municipal reform in the Austrian state of Styria

In this paper, we evaluate the effect of municipal amalgamations on election turnout in local elections. Following recent studies, we argue that municipal mergers can lead to less information about the election being made available to citizens and less influence for individual voters. That is, while citizens in the local context usually rely on their own direct contacts in local offices and among political candidates, the subsequent increase in population size due to a merger reduces opportunities for establishing such contacts and for having decisive influence on political decisions. Consequently, voters are less informed and less engaged, resulting in lower levels of electoral turnout in local elections. We test our argument empirically by using aggregate level data from the municipal level from the 2010 and 2015 local elections in Styria, Austria, which followed the amalgamation of some, but not all, municipalities in January 2015. The empirical results support our argument.     

Pushed by national politics or pulled by localism? Voting for independent local parties in the Netherlands

This study examines why citizens in the Netherlands vote for independent local parties. These are parties that run in municipal council elections, but do not run in elections at higher levels. This article examines a number of expectations: namely that voters vote for these parties out dissatisfaction with established parties, that they do so because they have a 'localist' political orientation or that they do so because their own national party is not running in the municipal elections. More support is found for the idea that voters vote for local parties because they are pushed away by national parties (either because they do not participate in some municipalities or because voters distrust them) than for the idea that voters vote for local parties for positive reasons, such as a localist political orientation. This article examines two surveys concerning voting behaviour in the 2014 Dutch municipal elections.     

Functioning and Impact of Incentives for Amalgamations in a Federal State: The Swiss Case

In Switzerland, where most amalgamations are voluntary, supportive measures for municipal mergers vary considerably between cantons. This study focuses upon the interests of higher-ranking state levels in amalgamation, the design of incentive systems set by the Swiss cantons, and their influence on the municipalities’ amalgamation activities. Empirical results show that with a higher number of municipalities, the canton sets more incentives for mergers. Also, financial incentives positively influence the municipalities’ merger activities. The data sources include comprehensive surveys of the Swiss municipal secretaries (2009/2010) and of the cantonal administrations (2010).     

Amalgamation Impacts on Local Public Expenditures in Sweden

This paper concerns amalgamation impacts on local public expenditures. The empirical analysis is based on the extensive 1952 municipal reform in Sweden. The 1952 reform amalgamated municipalities in a way that they had at least 2,000–3,500 inhabitants. This was done in the belief that larger municipalities would improve administration efficiency and public services by exploiting economies of scale. The results show that the reform had a negative impact on expenditures as long as the municipalities did not exceed a critical size.     

Fiscal and political determinants of local government involvement in public-private partnership (PPP)

ABSTRACT

In this article, we estimate the main determinants of local government’s engagement in public-private partnership (PPP) projects using logistic panel regression. We use data from 2478 municipalities and cities in Poland from 2009 to 2016. The results show that municipalities with higher levels of indebtedness have a higher probability of opening PPP tenders while local units that are more dependent on central grants or receive more European grants are less engaged in PPP. We also found that the mayors of municipalities and cities with stronger electoral competition engage in PPP with a higher probability. These results are important for discussions on the efficient use of PPP. They show that local government decisions made in conditions of fiscal constraint and political struggle can blur the PPP’s value-for-money aim.     

Municipal Mergers in New Zealand: An Empirical Analysis of the Proposed Amalgamation of Hawke’s Bay Councils

Local government policymakers across the developed world have frequently employed municipal amalgamation to improve the operation of local councils, and New Zealand is no exception. This paper empirically examines claims made in Potential Costs and Savings of Local Government Reform in Hawke’s Bay that the merger of the five local authorities in the Hawke’s Bay Region of New Zealand would generate significant cost-savings. We empirically test for the existence of scale economies in a single merged Hawke’s Bay council and find that no cost-savings can be expected. This removes a key argument for a forced Hawke’s Bay amalgamation.     

If territorial fragmentation is a problem,is amalgamation a solution? – Ten years later

ABSTRACT

Over the last decade, municipal territorial amalgamation has occurred in 15 European countries. The same period has seen spectacular progress in research on the relationship between municipal size and the functioning of local governments, as well as the impacts of territorial reforms on economic performance and local democracy. Quasi-experimental designs treating territorial reforms as specific “research laboratories” have constituted an important part of that trend. However, there are still important gaps in the knowledge and the study results are often inconclusive. These observations call for a research agenda for the future.     

Realising the Public Person

In response to a crisis of representative democracy in many Western countries, (local) governments have introduced instruments to circumvent political parties in order to establish more direct links between citizens and governments. One of these instruments is rendering electoral systems more personal, that is by giving more weight to preferential voting. Preferential voting is important since it constitutes a major element of the personal vote and it determines whether parties or voters are the main decision-makers in designating representatives. We have investigated, in relation to the local elections in Flanders (Belgium), in what kind of municipalities voters are most likely to cast a preferential vote, whether the electoral reform granting voters more power has had an effect, and if it has had an effect, in what kind of municipalities. We have put forward five groups of explanatory variables: socio-demographic, political, social capital, geographic and ballot form variables. Our analysis shows that variables from each group correlate significantly with the percentage of preferential votes, with population density and electronic voting as most important variables. A comparison between the 1994 and 2006 elections often yields the reverse picture: characteristics of municipalities that have a positive effect on the percentage of preferential votes cast have a negative impact on the evolution of preferential voting and vice versa (electronic voting being an exception). This results in the only obvious effects of the electoral reform being seen in urban municipalities, because elsewhere local politics was already to a large extent personalised by politicians being locally known. We could conclude that in these rural municipalities the electoral reform was superfluous.     

Intermunicipal cooperation,municipal amalgamation and the price of credit

In many countries, local government size is increasingly thought to be insufficient to operate efficiently. Two possible solutions to this problem are amalgamation and intermunicipal cooperation. This paper applies a novel methodology to shed light on the efficiency implications of this choice. Using a unique and rich micro-level dataset, we find that intermunicipal organisations (IOs) in the Netherlands consistently pay higher interest rates than municipalities, while there is no economic reason to do so. We interpret this as a form of inefficiency. Municipal amalgamation, on the other hand, does not result in higher interest rates. Our analysis eliminates one possible explanation, dispersed ownership of IOs, as the number of partners cooperating in an IO does not affect interest rates (no ‘law of 1/n’). This leaves the introduction of extra hierarchical layers as a result of cooperation, and the ensuing reduction in monitoring, as the most probable explanation.     

Population size or population density? An empirical examination of scale economies in South Australian local government, 2015/16

ABSTRACT

Advocates of amalgamation typically claim that substantial scale economies flow from municipal mergers, which generate larger local government entities by population size. We examined whether economies of scale exist in council outlays by analysing the expenditure of 68 South Australian local government areas using data from the 2015/16 financial year. However, given the correlation between population size and population density it is important to determine whether the influence of population size on expenditure is due to variations in population density. We find that when local government areas are stratified into subgroups on the basis of population density, the evidence of economies of scale largely evaporates. From a policy perspective, this suggests that in place of municipal mergers, policymakers should instead explore avenues for shared service arrangements in those functions which exhibit scale economies.     

Economies of scale and Brazilian local government expenditure: evidence from the State of Paraná

ABSTRACT

Controversy surrounds local government reform, particularly efforts directed at reducing the number of local authorities to secure economies of scale. We examine whether economies of scale exist in local government outlays by analysing the expenditure of 398 municipalities for the Brazilian state of Paraná using a 16-year panel dataset covering the period 2002–2017. We find evidence that municipal expenditure is characterised by substantial scale economies. However, given the strong correlation between population size and population density, it is important to ascertain whether the influence of population size on municipal expenditure is due to variations in population density or not. When local government areas are divided into sub-groups based on population density, evidence of scale economies remains with the majority of councils operating below optimal size. Municipal consolidations may thus lead to lower per capita expenditure.     

Electing Mayors with the Supplementary Vote Method: Evidence from Norway

Both Norway and England have used the supplementary vote (SV) method to elect mayors. SV was intended to elect mayors with a broad popular mandate, and deemed easy for voters to use. Previous research on English mayoral elections focusing on the supply side of the elections has found that voters supporting minority candidates with their first vote face difficulties using the optional second vote to choose among the remaining two top-candidates in municipalities where there are many candidates in the race. A close race, on the other hand, seems to give voters a helping hand in making this choice. Drawing on these findings, we link data on the 48 Norwegian mayoral races to survey data to further explore how the supply side of the elections and individual voter resources affect effective voting and use of the optional second vote. We use both standard logistic regression and multi-level models as statistical tools. The result reveals that 27 out the 48 elected mayors in Norway came out as majority winners (more than 50 per cent of the votes). The analysis suggests that the supply side of the elections is of minor importance for whether voters use their second vote or not. The probability of using the second vote is reduced by age, and voters who claim to understand how the electoral system works use the second vote more frequently. The analysis also reveals considerable variation in the number of first and second votes for the top two candidates (effective votes) between municipalities, and the results suggest that this variability may be explained partly by the closeness of the elections. Voters in municipalities with competitive mayoral races are more likely to vote effectively than voters in municipalities with less competitive elections. At the individual level party members are more likely to vote ineffectively.     

Optimal approaches to structural reform in regional and rural local governance: The Australian experience

Abstract

Australian local government finds itself at the vortex of various mounting pressures, including acute funding shortages, complex intergovernmental relationships, and forced structural reform programmes, that have made the status quo unsustainable. State government policy makers have placed heavy emphasis on council amalgamations as their chief means of resolving the problems facing municipal governance. This paper argues that such reliance on the blunt instrument of municipal consolidation has been misplaced, not only because it is based on the mistaken premise that ‘bigger is better’ in local governance, but also because it ignores many other promising alternatives to amalgamation involving various combinations of structural change and process change better suited to the extremely diverse character of regional and rural local government in Australia.     

Analysing Local Policy Agendas: How Dutch Municipal Executive Coalitions Allocate Attention

Abstract

This article provides an analysis of the allocation of attention to policy problems on the local level, focusing on the executive agenda of six municipalities in the Netherlands over a 25-year period. It reveals that there is specifically a local politics of attention, showing differences between national and local policy agendas in specific policy areas. We did not find evidence that the political composition of the local executive coalitions leads to agenda differences, revealing the more problem-oriented and pragmatic nature of local politics. We did find evidence of an effect of institutional arrangements between national and local government on shifting patterns of attention, such as due to decentralisation. This shows that the local politics of attention is limited in scope and conditioned by the functions of local government and the institutional arrangements of policy making in the Dutch decentralised unitary state and that rearrangements affect these patterns of attention.     

Indispensable,yet Invisible: Drinking water management as a local political issue in Swedish municipalities

ABSTRACT

Local policy-makers’ incentives to address an issue is conditioned by how they perceive public attention. Our study focuses on drinking water management at the municipal level in Sweden. Provisioning and management of drinking water is a responsibility of the local governments. Interviews with local politicians and public administrators in seven municipalities reveal that local policy-makers think that citizens view provisioning of drinking water as a taken for granted service, and also lack knowledge of and interest in drinking water issues. Public attention is further seen as a double-edged sword since engagement in water issues often is a result of problems with water provision. The findings are discussed from a theoretical perspective of the role of agenda-setting in public policy. It is argued that the view of policy-makers of citizens as unengaged negatively affects the incentives to bring drinking water to a prominent place on the local policy agenda.     

Does intermunicipal cooperation increase efficiency? A conditional metafrontier approach for the Hessian wastewater sector

ABSTRACT

This paper analyses the relationship between intermunicipal cooperation and efficiency of public service provision. Organisational arrangements of public service production, including self-provision, joint provision or contracting, affect incentives and internal transaction costs. Hence, cooperation gains from scale effects need to be balanced against technical inefficiencies. We analyse relative efficiency of wastewater disposal for German municipalities. We employ a conditional analysis in conjunction with a metafrontier approach to calculate relative efficiency measures and technology gap ratios controlling for organisational arrangements and further environmental variables. Jointly providing municipalities and contractor municipalities exhibit lower technical efficiency than self-providing and contracting municipalities. As confirmed by previous research, scale effects from cooperation and contracting apply to small municipalities primarily.     

Tax Collection in Developing Countries – New Evidence on Semi-Autonomous Revenue Agencies (SARAs)

Abstract

Over the last two decades, semi-autonomous revenue agencies (SARAs) have become a key element of public administration reform. They are supposed to improve revenue mobilisation and stabilise state–taxpayer relations. But do SARAs really outperform conventional tax administrations? This article argues that they do. Presenting the results of a panel analysis of local tax collection in Peru between 1998 and 2011, it shows that municipalities with SARAs collect more revenue than those with conventional tax administrations. The results also indicate that local revenue is more stable in municipalities with SARAs, which is good for budget policy and planning.     

David and Goliath in the poll booth: group size,political power and voter turnout

ABSTRACT

This article analyses how the presence of a dominant group of voters within the electorate affects voter turnout. Theoretically, we argue that its absolute size affects turnout via increased free-riding incentives and reduced social pressure to vote within a larger dominant group. Its relative size compared to other groups within the electorate influences turnout through instrumental and expressive responses – in both the dominant and dominated groups – to the degree of electoral competition between groups. Empirical evidence from a large cross section of German municipalities is in line with these theoretical predictions. The observed effects should be taken into account when redesigning electoral jurisdictions through, for instance, municipal mergers or gerrymandering.