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Louisville Metro has shown other regions
how mergers can change balance of power

By Mayraj Fahim, Local Government Adviser

24 December 2006: The merger of Louisville (Kentucky) with neighboring Jefferson County has created much excitement in US regions looking at this option to improve their local conditions. The Louisville merger, which took effect on 6 January 2003, after voter approval in November 2000, has gained much attention. It was the first large consolidation of an American city with its surrounding county in 30 years, when Indianapolis and Marion County (Indiana) merged.

Since the merger took effect, its early benefits (costs savings, area wide initiatives, joint work with suburban cities, new projects) have been enthused over by its proponents. In a workshop on merger lessons held in Louisville in November 2005, Louisville officials chose to highlight the positive impacts in seven areas - saving money; streamlining services; encouraging innovative solutions; forging more effective partnerships; improving the focus for economic development; 'bigger-picture' thinking and planning; and attracting better talent to government.

The newly re-elected Mayor of Louisville Metro, Jerry Abramson, has been a strong promoter of this development. During his previous terms as mayor of the city, Abramson had chafed at the counterproductive battle between the city and its suburbs - a constant issue in urban metropolitan regions of the United States. Generally urban policy experts and journalists have so far focused on this development in light of its place in this context.

However, less discussed is how territorial changes affect the power relationships of those involved in reorganization. For instance, in the course of the merger, there was much to gain individually and systemically for the new Mayor of Louisville’s consolidated government. In an article by University of Louisville faculty members H. V. Savitch and Ronald K. Vogel entitled “Suburbs without a City” (published in 2004 in Urban Affairs Review, Vol. 39, No. 6, pages 758-790) this whole subject – consolidation and its impact on power relations - forms a major part of their discussion.

They state in their article that power dynamics affected by reorganization of this kind is a subject often overlooked. Here one can mention that Columbia University Professor Ester R, Fuchs in her book entitled “Mayors and Money” (published by University of Chicago Press in 1992) is another urban policy scholar who has focused on the subject of power dynamics.

She asserts in her book, which focuses on fiscal policy, that local political dynamics and the resultant institutional relations established thereby, can influence policy decisions. In this light, what the authors state in their article on Louisville reveals that the reality of this exercise is just one more step on the path towards an equitable and balanced system achievable through the application of the consolidation mechanism in the United States - rather than as an example to emulate for other regions.

Owing to the peculiarities of the evolution and development of urban metropolitan regions in the United States, this challenge of balance has been an enduring one. For instance, in New York City’s merger, Manhattan gained over the other boroughs in 1898, something, which survives to this day and is shown in the imbalance of development in Manhattan in relation to the other four boroughs. In New York City’s case the city core dominates the rest; however, in the Louisville example, the reverse appears to be the case.

Does this mean that development in Louisville will be outside the urban core? Time will tell, though there are hints of it already. So rather than the New York model, Los Angeles is one that comes closer to mind. Perhaps one should mention that the latter city was also the subject of a secession bid voted on in 2002 instigated by suburban residents who claimed they suffered alienation from an unresponsive and distant city government.

Unlike Los Angeles, which had no incorporated land within its territory, which it expanded through annexation over the years, Louisville starts off with much unincorporated territory to use up, so there is time to see how that land will be divided and developed. A bid similar to that of Los Angeles, is not a near or medium term worry!

Power winners and losers
Suburban winners, urban core loser
In the case of Louisville, the net gainer was the area outside the city and the loser the old city. In that light this consolidation can be seen as a transitional step, since the area of the city of Louisville has risen from 60sq. miles to 386sq. miles - thus now exceeding the area of New York City, the largest city by population in the country. However, as we know from evidence in New York’s case, the amount of area available did not influence the development of urban property in favor of the larger area. But, already in the case of Louisville, evidence points to a suburban push.

As noted in the Savitch and Vogel article, under consolidation roughly two-thirds of the voters and a similar number of council seats would come from suburban districts. The suburban bias was also revealed in the “special taxing service districts” permitted by the consolidated legislation, a borrowed mechanism from Indianapolis (another consolidation where suburbs dominated the consolidated government).

These separate service districts within the newly consolidated area would be managed by appointed boards. These districts would permit different levels of service within the county and were coupled to different taxation rates. Under this legislation, the former city of Louisville could be established as an “urban service district” whereas other areas of the county could petition their voters to establish “taxing districts”, also to be managed by appointed boards.

In Indianapolis, where downtown redevelopment took place, post-merger, imbalanced burdens and beneficiaries resulted from the tax service district structure, now adopted for Louisville. As Savitch and Vogel noted, researchers have found that Indianapolis taxing districts increased discrepancies so that one region’s tax base was exploited for the benefit of another region’s residents.

The Indianapolis consolidation program locked major components of its property tax structure within a taxing service district system. As a result, with many key urban services financed at the special service district level, individual portions of the county supported some of the burdens of redevelopment when the benefits of the redeveloped downtown were countywide and even regional in nature. Hence, rather than reduce service disparities, this merger may increase them by legitimating differences in levels of service and taxation.

As a result of consolidation more than 80 small municipalities were exempted from any dissolution - a necessary compromise for the merger to take place. Only the city of Louisville would be absorbed into a larger consolidation. The consolidation legislation has also provided that after 12 years and with legislative and citizen approval, annexations can take place within the region. How this transpires could affect the issues of equity. Hence, the better off subdivisions could potentially combine as Savitch and Vogel point out and leave the poorer city portion to be governed by the larger metro government, already stacked in favor of the suburbs. For example, no provision was made in this context for the device now contained in the Tokyo Metro Government system.

In the Tokyo system, itself the result of a merger of city and county, the urban core has its own governments, though there are individual governments for the suburban entities and a Metro Government for the Tokyo region. Tokyo’s system includes 23 city wards and 39 municipalities that together with Tokyo form part of the Metropolitan government and include 26 cities, five towns and eight villages. Today it is one of many hundreds of examples in South-East Asia, most of them located in China and established in the post-1978 reforms era! (This author’s article on urban Chinese policy on this website further discusses this subject).

Strong mayor, weaker council
The consolidated Louisville is a strong mayor government in which the mayor will serve a full four year term and can serve up to three terms of office, whereas half of the metro council will run for re-election every two years thereby weakening its cohesiveness and negotiating strength vis-à-vis the mayor’s, should those factors become an issue in future.

The mayor in the new system also has the power of the combined budget of the city and county in his hands, and the power to appoint most agency heads without council approval. Moreover, the mayor also has the power to solely appoint the board, subject to council approval, with power over land use decisions and thus their role in affecting economic power, jobs and, needless to say, campaign contributions (a major factor in US politics determining who wins and loses elections).

One should therefore not be too surprised if Mayor Abramson (especially in light of his role in the process of consolidation and thereafter) follows in the footsteps of another consolidated government mayor, Richard Lugar of Indianapolis, all the way to national government level. In fact, during this current term, there was discussion in the media of the mayor’s potential ambitions beyond Louisville.

African American voting power reduction
The vote of minorities, formerly 33 per cent of the city population, had their consolidated influence diminished to 15 per cent of the regional population. From holding a third of the legislative seats, their share was reduced to 23 per cent. Given the demographics of an urban core versus the suburbs throughout the United States, this reduction in voting strength is to be expected in such a reorganization. However, if the losers were to gain from increased economic opportunities, then such a trade off would not be to their eventual detriment.

But as Bruce Katz and other urban policy experts have described, in fragmented systems it is difficult for urban core job hunters to know of opportunities outside city boundaries. Louisville can demonstrate that its systemic reorganization means that job hunters and job opportunities are more efficiently connected - although it has not revealed this so far. As studies of both the Twin Cities (by Brookings) and Portland Metro regional systems have illustrated, a failure to improve opportunities for the urban poor is a persistent sticking point, even though these systems have been praised for their power to increase equity inter-regionally – which, as Louisville’s power dynamics shows, will not be a feature of its system as it is currently positioned.

Conclusion
What the Louisville merger has also illustrated is that in America the familiar option is the one more easily sought - even if it takes place infrequently. Not surprisingly, local leaders from other regions - with a history similar to that of Louisville, where the consolidation option has been a long simmering issue repeatedly defeated at the ballot box - have been especially interested.

As a Brookings 2002 report of the Louisville region has discussed, the city faces two challenges that are eroding its strengths. “First, it has a workforce that is limited in size and skills that will hamper the city's ability to mature its low-wage, service economy to a higher-wage one. Second, the region is growing in a decentralized and divided way that will ultimately harm the area's quality of life and hinder low-income households' access to opportunities.”

Louisville’s power dynamics and structural changes illustrate that there is much room for evolution in the US metropolitan landscape; and that those interested in implementing reform could deliver more productive choices by avoiding counterproductive options and learning from productive metropolitan systems, not just within the US, but also from outside its borders.


Louisville Metro's former mayor Jerry Abramson


Also by Mayraj Fahim
US voters are not convinced that big is better in local government
Federal and state aid to US towns and cities is dwindling in an age when costs are rising for local government. Increasingly communities are looking to the consolidation mechanism as a way of achieving efficiencies of scale in response to citizen demands for services. However, voters are more often than not reluctant to approve mergers between neighbouring communities.

Pittsburgh (PA), Albuquerque (NM), Fort Wayne (IN), Buffalo (NY), Topeka (KS), Des Moines (IA) are among several areas that have recently tried and failed to win voter approval, or are considering city-county consolidation to secure cost savings.

Consolidation is the mechanism used to achieve economies of scale by reducing numbers of local government units. On the other hand, these economies of scale tend to end on reaching an optimal level of service delivery scale. Consolidation and its relation, annexation, are tools that many countries have used to illustrate in general that benefits exists when units are small - and are then reduced when those involved constitute large urban units.

In the United States, most have been for smaller units. The recent Louisville (KY) consolidation was the first one involving a large population region since Indianapolis (late 1960s). More