World Mayor vote 20/21

Local government
structures in the US
By Tony Favro, Senior Fellow



ON THIS PAGE: US local government structures under spotlight following COVID-19 funding ||| Municipal annexation by large cities ||| Cities, towns and villages in New York State ||| The value of villages ||| Summary ||| Sources & notes ||| Info box |||



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Local government USAUS local government structures under
spotlight following COVID-19 funding
June 2020: The US$2 trillion CoronaVirus Aid, Relief and Economic Security (CARES) Act, passed by the US Congress on 30 March 2020, includes financial aid for US state and local governments to cover costs associated with the Covid-19 pandemic. The CARES Act provides all states with direct funding based on population. However, only cities and counties with populations greater than 500,000 are eligible to receive funding directly from the federal government. Smaller local governments must negotiate with their state governments for a portion of the funding the state received.

Many US mayors are questioning the population threshold for direct funding. For example, 350 mayors of cities and villages in New York State sent a letter to their representatives in Congress requesting that all cities, regardless of their population, be able to apply to the federal government directly. “It makes no sense to use a population threshold for local budget relief in response to the COVID-19 pandemic since the resulting financial and economic distress is a problem in every city, village and town in New York,” the mayors wrote, noting that cities with a population of more than 500,000 represent only 14 per cent of the total US population.
(1)

The 500,000 population threshold may be viewed as arbitrary, yet it raises questions about the structure of local government in many regions of the US that are relevant to the ability of local governments to overcome budget shortfalls due to Covid-related expenses and revenue losses.

New York State is representative of how local governments in the northeast and midwest regions of the United States are structured. These ‘Rustbelt’ municipalities experienced, and are experiencing, some of the highest death tolls of the pandemic and can be expected to face some of the highest economic burdens.

One of the signatories of the letter from mayors in New York State to Congress is Robert Corby, Mayor of the Village of Pittsford for the past 27 years. Pittsford is widely-considered to be one of the most attractive, livable, and well-managed villages in New York State. With a land area of 1.8 square kilometers and a population of 1,355, Pittsford is the antithesis of the large local governments that the CARES Act prioritizes for funding. Yet Mayor Corby believes that villages like Pittsford are the “canaries in a coal mine.” In the search for funding to meet pandemic-related obligations, “everything will be on the table in coming years,” predicts Mayor Corby, including local government structure, “and the way villages are treated will go a long way to determining how prosperous and efficient Rustbelt communities of all sizes can become.”  

Municipal annexation by large cities
In 2019, 37 cities in the United States had populations greater than 500,000, according to the US Census Bureau. Twenty-nine of these large cities are in states in the southern and western regions of the country where municipalities can annex populated surrounding areas relatively easily; eight large cities are found in northeastern and midwestern states where municipal annexation is extremely difficult.

In 1960, the geographic distribution of large cities in the US was very different. Only seven of the 21 cities with a population greater than 500,000 in 1960 were in southern and western states.

1960 is a key date in the story of US local governance, because it is around this time that most northeastern and midwestern states reduced or removed their cities’ powers of annexation. Currently, there are about 400 cities in 37 southern and western states that are able to annex relatively freely. Of these, at least 300 cities annexed surrounding areas one of more times between 1990 and 2010. Between 1960 and 2010, the top 50 most annexing cities quadrupled their municipal land areas. The growth of all of the 21 US cities that reached the 500,000 population level since 1960 was aided by annexation.
(2)

Annexation allows cities to capture population that would otherwise grow outside city boundaries. Between 1960 and 2010, all major annexing cities increased in geographic size and population, while municipal boundaries in northeastern and midwestern cities remained essentially unchanged and their total population dropped by about 30 per cent.
(3)

Annexing cities benefit tremendously from their ability to capture metropolitan population growth and the associated tax base. Annexation enables a city to retain wealth (both income and real property) as residential development spreads. Incomes are higher relative to surrounding suburbs in annexing cities than in those with fixed boundaries. City credit ratings are higher in annexing cities. Public elementary and high schools are more desegregated in annexing cities, and affordable housing is more evenly distributed geographically. Metropolitan areas where cities can annex also have fewer units of local government. It is widely perceived than a complex local government structure is one of the factors driving high overall government expenditures and taxes in northeastern and midwestern states, such as New York.
(4)

Info Box
Local government powers,
incorporation and
annexation in the US
It is very difficult to generalize about local government structure in the United States. In many states, local governments are classified according to population size or geographic size, and each class has certain powers associated with it. There is a concept of progression from village to town to city status. In other states, the organization and powers of local governments are set out in their own charters and differences may be minimal. In New York State, for example, the powers and duties of New York City and those of the smallest village with only a handful of residents are essentially the same.

In New York State, the State Legislature may incorporate a community of any size as a city, town, or village. The local community must submit clear evidence that its people desire incorporation. Typically this means that a petition from 20% of the voters or 50% of property owners in an affected area and a locally drafted charter are submitted to the Legislature along with a supporting (“home rule”) message from local governments that would be impacted by the incorporation. Other states may impose such municipal incorporation standards as minimum population size, minimum population density, minimum tax rate, and minimum distance between proposed and existing municipalities.

Municipal annexation is governed by state laws which vary from state to state. Generally, the most common methods of annexing property are: annexation by unanimous consent, annexation by one-half approval, and annexation by referendum. Each method has its own requirements, process, timeline, and participants. In Texas, a state with one of the most permissive annexation policies, cities have the authority to annex property contiguous with, and within one mile of, their current municipal boundaries. The annexation can be voluntary of involuntary. The city adopts an ordinance initiating the annexation and then holds two public hearings and two ordinance readings to approve the annexation. The annexation is completed upon second reading of the ordinance. New York State, which has some of the most restrictive annexation laws, requires a formal referendum of city and annexed-area residents.


Cities, towns and villages in New York State
New York State is emblematic of how local governments
evolved and are governed in northeastern and midwestern Rustbelt states.

New York State’s local government structure, like that of other Rustbelt states, evolved over more than three
centuries. The state was subdivided into counties, the counties into towns, cities were chartered, and villages organized. By the mid-1900s, most municipalities in the state were established and most municipal boundaries fixed. Laws were adopted to regulate the three classes of municipalities—cities, towns, and villages—and each class received its own set of laws.

Before World War II, cities in New York State were almost exclusively the centers of population, business, and culture. Towns were relatively rural and sparsely settled, sometimes with a more densely populated center, which was later incorporated as a village to provide basic municipal services. Cities, towns, and villages, in other words, presented clear differences in size, density, and services provided. Cities and villages, in particular, represented concentrations of population and wealth and centers of service provision.

Before World War II, cities in New York State would often annex settled portions of the towns surrounding them. Thus, as cities’ boundaries grew, so did their populations. Each annexation required a special act of the State Legislature, but such acts were generally routine. Cities were required to provide full municipal services to the annexed areas.

As suburbanization increased after World War II, town residents began to resist annexation into cities. The New York State Legislature allowed local governments to create special property taxation districts to fund basic municipal services such as water, sewer, and fire protection. Special districts allowed towns to provide services they otherwise could not directly provide and which they previously procured through annexation into a neighboring city. Today, special district expenses are far from incidental, representing as much as 70 per cent of town property taxes in some counties in New York State.

In the early 1960s, the State Legislature adopted legislation that made it extremely difficult for cities to annex populated areas of surrounding towns. At this time, they also passed so-called Home Rule legislation, which made it difficult for the state to pass a law affecting a specific local government, except at the request of the affected municipality. Such legislation served to preserve the existing geographical municipal structure and boundaries.

As a result, annexations or mergers of municipalities almost never occur in New York. The municipal structure has been relatively unchanged since the 1960s in spite of the momentous demographic, economic, and spatial changes of the past 50 years.

Towns provide a good example of these changes at the local level. Towns were originally created to provide local administration, with the minimum necessary powers, of rural areas. Today, many towns have the characteristics of cities, such as large populations and high densities. Indeed, seven of the ten largest municipalities by population in New York State are towns, not cities. Today, towns are fully functional municipalities, providing public safety, water, sewer, and other services, and the incorporation of a village is no longer necessary for these services. In other words, the rational differentiation between cities, towns, and villages based on population densities and settlement patterns has been obliterated over the years. Today, distinctions between cities, towns, and villages have little relevance to the functions provided by these local governments. Yet the original local governance structure and underlying enabling legislation persist.
(5)

The evolution of the local government structure over the past 50 years and its current status in New York State are not dissimilar from those of other northeastern and midwestern states. Changes in the states’ municipal structure and laws arguably have not kept pace with the momentous demographic, economic, and spatial changes that have confronted the Rustbelt since the 1960s.

As a result, the number of independent local governments in the northeast and midwest regions of the US is high in comparison to national averages, and the local government structure in these regions is rather complex. In New York State, for example, there are 932 towns, 554 villages, and 62 cities. All State residents live in a city or a town, and their boundaries do not overlap. Villages are located within town boundaries, but are independent municipalities.


The value of villages
While there have not been significant annexations or mergers of municipal populations in New York State in more than 50 years, 25 new villages have been incorporated and 29 existing villages have been dissolved into their surrounding towns since 1960.

In other words, while the overall local government structure and operational rules in New York State have remained virtually unchanged, and the number of cities and towns has not changed, nearly 10 percent of all villages have undergone existential transformations.

Analysis suggests that, in many cases, village residents voted to dissolve their village because of fiscal concerns. Village residents pay property taxes to the town in which their village is located, as well as to the village in which they reside. Dissolution often promises tax savings.

The impetus for many village incorporations was the power to regulate the use of village land and the design of village buildings separately from the rest of the town to protect the unique village character from being overwhelmed by surrounding suburban development.
(6)  

The dynamics of village change offer lessons to municipalities of all sizes, according to Mayor Corby of Pittsford. Corby, a registered architect, is widely-recognized for his responsible fiscal management and for preserving and enhancing the historic 19th century character of Pittsford, which was incorporated in 1827, and fully developed by the late-1800s.

“Fiscal concerns are important, as they must be,” says Mayor Corby, “but these are highly connected to the local revenue structure, tax and debt limits, state revenue sharing, state municipal law, and the application of many other state and county programs. We tend not to discuss these concerns in debates about village dissolution, and instead focus on property taxes, which are just the tip of the iceberg. All of these underlying fiscal concerns are related more to the proper and appropriate functions of a local government than to the size or number of local governments.  

“The other side of the equation is community stability,” continues Corby. “Fixed municipal boundaries can be a stable frame of reference for people in a changing and unpredictable world. If the provision of public services is rationalized and financial resources are fairly distributed and policy tools are supportive within a state and metropolitan area, municipal boundaries shouldn’t hinder local or regional prosperity or equity.”

And there are intangibles that are difficult to value monetarily. “Visitors tell me they act differently when they come to Pittsford” says Mayor Corby, “they’re calmer, more polite, friendlier. When you spend time in a village like Pittsford you begin to sense how the physical space can engage people in cooperative behavioral change. It can be quite remarkable.”


Summary
The Covid-19 pandemic appears to be adding a new layer of complexity to societies. It may change the ways we communicate and do business. The long-term social impact is unpredictable. Costs evade easy calculation. Federal relief and stimulus programs, while crucially important, often place limits on local control.

Many US municipalities’ feel their tax bases and sense of place are jeopardized, and solutions are not obvious.

It may be necessary and appropriate to fundamentally reassess the local government structure in some US states and regions. This likely means reassessing legislation, sanctions, regulations, taxes and subsidies, the provision of public services, and the provision of information and guidance material. “We also have to respect tradition and history as embodied in our smallest local governments, our villages,” says Mayor Robert Corby, “not as an inhibitor, but rather as a stimulus of economic, social, and community benefits.”


Sources & notes
All publications retrieved on May 28, 2020.

(1) New York Conference of Mayors (April 13, 2020). Letter from Mayors to New York’s Congressional Delegation. Retrieved from https://www.nycom.org/115-news/1428-ny-mayors-sign-on-letter-to-ny-congressional-delegation-seeking-direct-federal-assistance.

(2) Rusk, David (August 2006). Annexation and the Fiscal Fate of Cities. The Brookings Institution Metropolitan Policy Program. Retrieved from https://www.brookings.edu/wp-content/uploads/2016/06/20060810_fateofcities.pdf (updated by author with US Census population and legal boundary change/annexation data).

Tyson, Christopher (2012). Annexation and the Mid-Size Metropolis: New Insights in the Age of Mobile Capital. University of Pittsburgh Law Review, Volume 73. Retrieved from https://lawreview.law.pitt.edu/ojs/index.php/lawreview/article/view/226/203.

(3) Rusk, op. cit. and US Census.

(4) Rusk and Tyson, op. cit.

(5) Office of the New York State Comptroller (October 2006). Outdated Municipal Structures: Cities, Towns and Villages–18th Century Designations for 21st Century Communities. Retrieved from https://www.osc.state.ny.us/localgov/pubs/research/munistructures.pdf.

New York State Department of State (March 2018). Local Government Handbook. Retrieved from https://www.dos.ny.gov/lg/publications/Local_Government_Handbook.pdf.

(6) New York State Department of State, op. cit.


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