Shared municipal services: Issues and evidence

As municipal government budgets get tighter and tighter, public officials seek out alternative arrangements that can increase efficiency and lower costs.  One possible option is to combine with other municipalities in the provision of services.  Spreading fixed costs over a larger service area and seeking out economies of scale by sharing the provision of services with neighboring municipalities at first seem like an obvious solution.  Yet while the economic theory suggests that sharing services with neighboring municipalities is a good idea, the political reality involved in sharing services is significantly more complicated.

What are the political complications involved in sharing services between municipalities?  Questions of equity, accountability, citizen involvement and quality of service all arise when municipalities consider the shard services option.  Given these complications, what is the evidence as to the efficacy resulting from pursuing shared service arrangements at the municipal level?

This paper will attempt to answer these questions.  After identifying various approaches to sharing services and tracing the growth in these arrangements, the paper will review the economic logic of shared municipal services.  The paper will then examine the issues involved in attempting to undertake shared services projects and highlight the evidence as to the success of shared services projects as a method of reducing costs and/or improving the quality of service. In attempting to highlight the implementation issues and examining the evidence as to the effectiveness of various shared services attempts, the paper will rely heavily on the 2007 International City/County Management Association (ICMA) Alternative Service Delivery data set.