Merger Advocates Need Better Arguments

Member Group : Allegheny Institute

Proponents of merging the governments of Pittsburgh and Allegheny County claim the county’s numerous municipalities hinder economic growth. Recently a local advocate said, "We know businesses will invest in places with streamlined governments, and we know that they’ll invest elsewhere if you don’t have that". Analysis of employment and population data from ten Pennsylvania counties finds no evidence to support that statement.

Philadelphia is essentially a fully merged city-county government and has been that way for a long time. There are no separate municipalities within the county and most of the government functions are handled by the City. Unfortunately, that consolidation has done little to prevent an extended period of population and employment decline. Jobs data for surrounding counties argue strongly that a consolidated streamlined government is not a prerequisite for economic growth. Consider that from 2000 to 2008, Philadelphia experienced net job losses totaling 4.3 percent—continuing a long term trend. Meanwhile, Philadelphia’s bordering counties of Bucks, Chester, Delaware, and Montgomery all recorded employment gains with Chester County posting an impressive 10.67 percent rise over that time period.

A very similar pattern held for Allegheny and its bordering counties. For the period 2000 to 2008, Allegheny County experienced a job loss of 1.5 percent. By contrast, employment in neighboring Butler County climbed by 7.9 percent over the period. Washington County follows with a job increase of almost 5 percent and Westmoreland County jobs grew by 2.07 percent. Beaver County experienced a slight 0.1 percent, employment loss from 2000 to 2008.

The difference between Allegheny and Philadelphia? One has consolidated government, the other does not. But economically the numbers are in the same direction.

Population change is an indicator of economic climate in a county. A county enjoying population gains is in all likelihood a county with a good tax and economic climate compared to counties losing population. Thus, paralleling its employment losses, Philadelphia lost 4.5 percent of its population between 2000 and 2007. In comparison, none of Philadelphia’s surrounding counties registered population losses. In fact, Chester County grew by a substantial 12.2 percent from 2000 to 2007.

Similarly, Allegheny County lost a hefty 4.9 percent of its population from 2000 to 2007. Beaver and Westmoreland Counties also experienced population losses of 4.60 percent and 2.07 percent respectively. However, Butler County grew by 3.31 percent and Washington by 1.31 percent.

Obviously, "streamlined government" in Philadelphia has failed to entice substantial amounts of net new business investment. At the same time, Butler County and Chester County—with their unconsolidated governments—have performed well. Allegheny County—with its unconsolidated government—performed relatively poorly. What is the most likely explanation for these disparate findings? Simple; Philadelphia and Allegheny County have business and tax climates that are causing firms and people to look for friendlier confines in surrounding counties or perhaps out of state.

Merger advocates are likely to reply to these findings by arguing that Allegheny County’s large number of municipalities (130) makes it qualitatively different from the surrounding counties as well as the counties around Philadelphia. That argument is not compelling for a simple reason. The average number of people per municipality in Butler and Washington is a third of the number in Allegheny County while the number in Chester is about two thirds that of Allegheny. In short, if anything, all these counties are less "streamlined" than Allegheny County in terms of the number of governments per 1,000 people. Yet they perform better than either Allegheny County or Philadelphia.

Besides, the Nordenberg Committee merger proposal rolled out last spring calls for leaving 129 municipalities (all except Pittsburgh) in place. So just how much streamlining would be accomplished with a merger of only the County and Pittsburgh remains a bit of a mystery. Moreover, the proposed creation of an "urban services district" (with separate services and taxes for Pittsburghers) in the Nordenberg report runs immediately afoul of the Pennsylvania Constitution. In short, the scheme was a non-starter.

If accomplishing something that will actually make the County more competitive is the goal, advocates should focus on reforms that will lead to real cost savings, less complicated regulations and lower taxes. There are plausible remedies. The state could offer monetary inducements to help municipalities voluntarily merge services or governments. These inducements would take the form of grants to be used as tax reductions as the consolidations proved successful in cutting total expenditures. Perhaps three years of one dollar in incentives for each dollar of confirmed savings.

Continuing the unrelenting push for a full city-county merger in the face of all the insuperable obstacles is taking time and energy away from working on solutions that are doable and have a chance of succeeding.
Jake Haulk, Ph.D., President Elizabeth Weaver, Research Assistant

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