BOSTON, MA - New research from the Federal Reserve Bank of Boston's New England Public Policy Center is prompting state and municipal officials to take a second look at a familiar proposal: regional consolidation. Motivated by the prospect of continuing strain on local government finances, this research examines the extent to which joint service provision could potentially reduce costs.

The research, The Quest for Cost-Efficient Local Government in New England: What Role for Regional Consolidation?, was presented at a forum this morning at the Boston Fed and addresses three areas prime for consolidation:

• emergency call handling and dispatch via Public Safety Answering Points (PSAPs),
• public health services, and
• public pension plan administration. 

"Not all local public services are strong candidates for regionalization, though capital-, technology-, and expertise-intensive services often benefit from consolidation," said Yolanda Kodrzycki, director of the Boston Fed's New England Public Policy Center and author of this research. "In these areas, greater regional consolidation can reduce local governments' costs without compromising service quality."

The research shows that by pursuing aggressive consolidation strategies, Massachusetts cities and towns could collectively save between 25 to 60% in annual operating costs for the three services analyzed. Connecticut cities and towns also could achieve sizeable savings. Among the New England states, Maine has the least fragmented structure for these local services, which implies that that state has the lowest potential for achieving budgetary savings by further consolidation in these areas.

The New England Public Policy Center's research suggests that the state consider providing incentives to promote larger scale consolidation than is already occurring. "Since 2007, Governor Patrick and I have worked closely with cities and towns to build a new paradigm and partnership between state government and municipal government," said Lieutenant Governor Timothy Murray, who provided opening remarks at today's forum. "Regionalization is an effective model for communities to collaborate across municipal lines to preserve critical local services. Our Administration will continue to encourage regionalization because these initiatives, large and small, will deliver cost savings and greater efficiency in the delivery of services."

Reducing costs is not the only incentive for greater regional consolidation, according to both the research released and a panel of experts featured at the forum. According to Linda Dunlavy, Executive Director of Franklin Regional Council of Governments, "regionalizing municipal services is really hard. Studies and events like these, that show regionalization can improve the quality of services and use tax dollars more effectively and efficiently, are critical to helping municipal officials consider how collaboration can help them and their communities." John Petrin, Burlington, Massachusetts' Town Administrator, noted that "regional consolidation will be necessary for some communities to provide an acceptable level of service to their citizens."

Read the full report, related research, and related video at http://www.bostonfed.org/economic/neppc/researchreports/2013/rr1301.htm.