THE LOCAL GOVERNMENT CONUNDRUM By DAWN CLARK NETSCH, Comptroller, State of Illinois

The debate over local government, and the question of whether we have too much of it in Illinois, is becoming as hot as our summer.

Recent anti-tax fervor has focused attention on the fact that Illinois has 6,627 units of local government, 5,926 of which have the power to impose property taxes. These taxing units take in combined revenues of nearly $9 billion per year.

But do we really need some 6,000 units of local government to preserve democracy in Illinois? The argument for local governments is that they are closer to the people and therefore are more accountable. Is it really possible, though, for Illinois citizens to "keep account" of 6,000 government units?

Moreover, can so many separate entities efficiently and frugally deliver essential government services? These are important and tough questions that need to be addressed, especially when the finances of all governments, state and local, are so strained.

Political reality suggests that local governments will not suddenly vanish or be abolished in Illinois. None the less, we should encourage areas of the state to study their many layers of government. This type of self-examination might lead to a less cumbersome and costly government structure, one that taxes less and delivers services more efficiently.

The recent protracted state budget debate showed that while there are divergent views on how and where to cut state programs, there is wide agreement that government must be streamlined.

Evidence of this is seen in the General Assembly's passage of the Local Government Accountability Act. The act calls for the legislature's revenue committees to conduct hearings in the next few months aimed at increasing the accountability of local governments, and to establish by the end of the year criteria for the eventual phasing out of unjustifiable local governments.

Currently more than a third of Illinois' units of local government are special districts that provide only one service, such as an airport, fire department, flood control, forest preserve, library, mosquito abatement, sanitation, street lighting, or T.B. Sanitariums, to name a few.

These special districts account for less than 15 percent of the local government tax bite — almost all of it in property taxes — but they receive much of the fire of critics of local government. Some critics charge that the services are just plain unnecessary, while others argue that the services are delivered inefficiently through these smaller, disconnected local governments.

Like them or not, local governments have taken on greater responsibilities in the aftermath of Ronald Reagan's "new federalism," which in the 1980s eliminated federal revenue sharing and significantly cut aid, particularly to cities.

Under Reagan, the responsibility for many programs — such as waste water treatment — was shifted back to states and local governments, and thereby abandoned by the federal government. But the resources did not follow. As a result, pressures on local governments mounted.

At the same time many states, themselves beset by staggering deficits, cut back on state aid to local governments. Illinois has not cut back on financial support of local government, but neither has it filled the gap left by declining federal aid. The state has, however, continued to impose mandates on local governments, while failing to reimburse locals for the costs of these mandates.

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With this array of conflicting pressures — more demands for service, reduced resources to pay for them — it is both timely and appropriate to bring local government in Illinois front and center. Will it grow in importance? Will consolidation or elimination become a pattern of the 1990s? How can we get more services for fewer tax dollars?

The spectrum of opinion in the local government debate is as broad as Illinois is long and wide. On one end are the abolitionists who would have the state, by law, force the elimination of many, if not most, of the local units. On the other end there are scores of defenders, some of whom have political turf to protect, who resist any effort at streamlining government.

In between are groups like the Taxpayer's Federation of Illinois, which attempts to ferret out the underlying facts of local government accountability without taking an all-or-nothing position. Their recent study by Professor (and former Chicago Comptroller) Ronald Picur examined "Local Government Fiscal Practices: From Stewardship and Accountability to Smoke and Mirrors," concluding that there are hidden fiscal abuses in local governments that need to be corrected.

Also in the middle is the Office of the Comptroller, which is charged with overseeing the finances of all local units (except school districts) on an annual basis, and also has authority to provide advice and technical assistance on accounting standards and fiscal management.

As I see it, the Comptroller's Office can fulfill several important functions that grow out of its assigned responsibilities. We are already serving as a catalyst in bringing together all of the agencies, public and private, who share our commitment to putting in place a strong monitoring and reporting of local government finances, combined with a system of identifying and advising local governments that are headed for financial trouble. This work is underway.

The training of local government officials in good fiscal management is essential. The Comptroller's Office, by statute, is responsible for training and certifying county treasurers. This project is well along — a great cooperative effort. It will also serve as a model for bringing together the state's higher education institutions and local government officials for expanded training in sound fiscal practices.

In addition to these activities aimed at realizing more efficiently run local governments, the question

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remains, how many units do we need to get the job done well. Again, the Comptroller, with existing responsibilities for local government oversight, can play a role in shaping — and even refereeing — the spirited and essential debate about the role of local government in Illinois.

It is easy for people who live far away from the places they study and cite — people who don't have to deal with the mosquitoes and the flooding and the need for fire protection and adequate sewer systems — to say the taxing districts that address these problems are wasteful and unnecessary.

But the problems are real and the functions are essential. We need only ask the people who live there and have to face them. Perhaps some of these people don't fully appreciate the number of taxing units that contribute to their final property tax bill, or may not know their representative on the fire protection board so that they can insist on accountability.

There are even legitimate concerns about whether there is enough elected and appointed fiscal know how and talent to manage the nearly 6,000 taxing units.

It has been suggested — using highways as an example — that roads would be better maintained if township highway authorities were merged under the county highway systems. We need to determine whether some taxing units can be consolidated with their same-purpose neighbors to allow for a more efficient, coordinated delivery of regional services. In some cases, intergovernmental arrangements may help some units to a less costly delivery of services.

There should be a lesson we can learn from Illinois' experience with school districts. It was a combination of demographic shifts, skyrocketing costs and state incentives (both sticks and carrots) that encouraged school districts across the state to consolidate their operations over the last several decades. This trend caused the number of public school districts in the state to shrink nearly 20 percent, from 1,174 in 1970 to 955 at present. And at one point, in 1950, we had 4,415 school districts!

With the proper focus and incentives, perhaps we

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can see a similar kind of paring down of government and services among other taxing units. But the solutions — consolidation or elimination — must accommodate local initiatives.

The necessity of consolidation and sharing resources — the need to streamline services — is upon us. It is a painful and controversial process, but so is the prospect of more and higher taxes.

October 1991 Municipal Calendar

This calendar is based upon the most current information, court decisions and legislation of which the League has knowledge as of the date of this publication. It supercedes similar information contained in all other League publications.

The tax levy ordinance must be passed and a certified copy thereof filed with the county clerk on or before the second Tuesday in December. (Chapter 24, paragraph 8-3-1.)

For municipalities having a fiscal year which begins on May 1, the treasurer's report for the preceding year must be filed with the clerk by the end of October. (Chapter 24, paragraph 3-10-5.1.)

The quarterly statement by inspectors of house of correction is due. (Chapter 24, paragraph 11-4-5.)

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