Tuesday, January 31, 2017

Consolidation Is In The Wind

The State of Illinois has 6,963 units of local government, by far the largest number of units of local government in any state in the Union.  Texas is second, with 5,147.  Of neighboring states to Illinois, Missouri has the largest number of units of local government, with 3,768.  The result is that Illinois residents end up paying taxes to support multiple jurisdictions that supply overlapping or easily consolidated services.  With a median effective property tax rate of 2.32% of market home value per year, Illinois residents pay the second—highest property tax rate in the country.  Delivering Efficient, Effective, and Streamlined Government to Illinois Taxpayers, Task Force on Local Government Consolidation and Unfunded Mandates (December 17, 2015), p. 3.

It is with these facts in mind that Illinois has embarked on a slow but sure road toward consolidation of local governments.  The first major target of consolidation has been consolidation of emergency telephone system boards.  Public Act 099-0006, amending the Emergency Telephone System Act, was signed into law in June of 2015. Among other objectives, the statute seeks to eliminate “paper” emergency telephone system boards (boards that exist on paper but contract for all 9-1-1 emergency services), to require counties that do not have 9-1-1 service to provide such service by means of intergovernmental agreements with existing emergency telephone system boards, to reduce the number of public safety answering points (PSAPs) in counties with a single emergency telephone system board (ETSB), and to require consolidation in any county with a population of 250,000 or more of any ETSB that serves a population of 25,000 or less.  In light of the July 1, 2017 target date for meeting the consolidation requirements of the statute, a number of consolidations of ETSB’s and emergency telephone system dispatch operations have occurred.

A lesser-known means of reducing units of local government is found in the Counties Code.  Among the legislative findings contained in Division 5-44 of the Counties Code, at 55 ILCS 5/5-44005, are the following:
  1. Illinois has more units of local government than any other state.
  2. The large number of units of local government results in the inefficient delivery of governmental services at a higher cost to taxpayers.
  3. In a number of cases, units of local government provide services that are duplicative in nature, as they are provided by other units of local government.

When Division 5-44 was made effective as of August 2, 2013, it applied only to DuPage County.  But effective on August 5, 2016, the statute was extended to Lake and McHenry Counties, as well.  Essentially, it provides that the County Board, by ordinance, can dissolve a unit of local government that is (a) located within one county, (b) has a governing board the majority of members of which are appointed by the county board chairman or county executive, with the advice and consent of the county board, provided that the county board cannot dissolve a fire protection district that employs any regular full-time employees, a conservation district, or a special district organized under the Water Commission Act.  Any such ordinance is subject to a backdoor referendum.

Major targets of Division 5-44 are likely to be “paper” fire protection districts that have taxing powers but contract for all services, including fire suppression and advanced life support (ALS or paramedic) services.  If dissolved, a trustee-in-dissolution is appointed by the county to manage the affairs of the unit of local government, including the presentation of a plan for consolidation and dissolution to the county board.  While the trustee’s powers are extensive, they may not be exercised if the result thereof is to increase the average response times or decrease the level of services, and they do not include the power to decrease the tax levy in effect at the time of dissolution.

With this statute in mind, units of local government, and particularly fire protection districts, in Lake and McHenry Counties are considering their options.  These options include whether to engage in preemptive consolidations or contracts for services and whether to seek to have fire protection district board members elected, rather than appointed, in order to escape the application of the statute.

Consolidations necessarily have employment consequences.  If a unionized dispatching operation is consolidated, the employer will have “effects bargaining” obligations with respect to the employees affected by the consolidation.  If a fire protection district that provides services by means of a volunteer fire department is consolidated, the impact of the consolidation on the volunteers (who often include professional firefighters from other departments who are serving as paid-on-call firefighters for the fire protection district on their days off) will have to be considered, even if no union negotiations are involved.  Finally, dissolution of a unit of local government can be expected to have an emotional effect on the residents of the area served by the unit, resulting in obstacles to consolidation even from those likely to benefit from it.