Non-Profit Synergies

Should Municipalities Merge?

This question is as abstruse as to whether or not corporations should merge. While efforts such as these gain wide support because of the belief that they will save money, there evidence shows the opposite. This is analogous to its cousin, the for-profit mergers, with all the promises of “synergies” post-merger. Too often municipalities are so despite that they are grasping for any viable alternative – even if it is the point of a sword.

Government consolidations may seem to make all of the sense in the world academically. In practice, they cost more. There are no economies of scale in larger governments, except for spending interests. Voters have less influence in larger jurisdictions.

For the most part, however, there is no going back. Mergers are forever. So are the higher taxes and higher spending. Because the mergers are not properly planned – the limited economies of scales are outweighed by the bureaucratic inefficiencies of size. Moreover, the more efficient municipality entering into the merger cannot absorb the challenges of the poorer municipality in either the short-term or long-term.

These merger can be effective, but detailed planning and realistic assumptions are prerequisites for any possible measure of success.

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