When it comes to paying for costly government services, a little creativity goes a long way.
Chase scenes in old Westerns often hinge on matters of jurisdiction: If the hated desperados manage to gallop across the county line before being lassoed or gunned down, their law-abiding pursuers — loath to violate another sheriff's turf — always end the chase then and there.
Wickenburg, Ariz., seems the kind of place where such rugged frontier traditions might still apply. A community of about 5,500 residents founded in 1863 after Henry Wickenburg struck gold at Vulture Mine, the ranching and resort town lies in the foothills of the Bradshaw Mountains an hour north of Phoenix. Contrary to its Old West atmosphere, however, Wickenburg takes a forward-thinking approach to jurisdictional boundaries.
“If Maricopa County is up here doing some chip-seal overlays on a county road and comes to a jurisdictional boundary where the road continues into Wickenburg, normally they would stop right there,” explains Shane Dille, town manager. “That doesn't make much sense, so our contract with the county allows [it] to go forward and work on the city's portion of the road, as long as they coordinate it with us.”
The so-called “entente agreement” with Maricopa County allows Wickenburg to avoid the costly process of starting such a project from scratch. It is an example of how small city and county governments are using creativity to cope with today's tight budgets.
David Borak, a researcher for the Washington, D.C.-based International City/County Management Association (ICMA), saw plenty of creativity firsthand at the group's annual conference last year. Asked to come up with “50 Creative Financing Ideas” during a session of the same name, a roomful of frontline budget warriors submitted well over 100 practical solutions. “Our members can come up with amazing, innovative ideas,” Borak says. “City and county managers lack the power to raise taxes, and they don't have much control over politics. They need to be resourceful to get the job done.” That can involve everything from sharing services to selling sponsorships to privatizing money-losing operations. Many of the solutions are not only creative, Borak notes, they also are strikingly simple.
Sharing the load
The entente agreement allows Wickenburg and Maricopa County to take advantage of each other's strengths by collaborating on a variety of cross-jurisdictional transportation projects. Maricopa County might ask Wickenburg to repair a county-owned road just outside Wickenburg city limits, thus avoiding the high cost of transporting county crews and equipment 60 miles from Phoenix. In exchange, Wickenburg might receive a cash payment or credits redeemable for services-in-kind. “We have a grader and a front-loader in Wickenburg, so if there are shoulders that need to be scraped for the county, we can do that and build up credits,” Dille explains. “Then, if we need to re-stripe one of ourbut don't have the equipment for that, we can call the county to come up and do it. There's no transfer of monies.”
Gary Lasham, highway-operations engineer for Maricopa County, says small Arizona towns, like Gila Bend, maintain similar agreements with the county. Officials negotiate contracts for each entente project. “If we can provide seamless maintenance at a lower cost, it benefits the traveling public,” Lasham notes. “They don't care so much about jurisdiction.”
While some local governments share responsibilities to make the most of existing resources, others tap new sources of revenue by taking on responsibilities. For example, with a population of just 7,000, the Milwaukee suburb of Delafield once relied on ambulance crews certified as emergency medical technicians (EMTs) rather than full-fledged paramedics. But in 2001, Delafield decided to boost the quality of its emergency care. The Delafield Fire Department, which then employed three full-time and 48 paid-on-call employees, sent two EMTs to take 1,100 hours each of paramedic training. The 10-month-long certification course cost Delafield about $5,500 per EMT.
City Administrator Matt Carlson says the paramedic program quickly became a victim of its own success. “The number of calls we were receiving from within the boundaries of our community and elsewhere in the region started to grow,” he explains. “Emergency-room personnel started to notice that patients we were bringing them had a much higher likelihood of surviving their illnesses or injuries.”
That led to skyrocketing demand for Delafield's emergency services, particularly from nearby Oconomowoc Memorial Hospital, which needed expert crews to transport patients with life-threatening conditions to specialized medical centers. In 2001, Delafield'scompleted 125 such transfers for a total of 736 calls (171 more than the previous year). In 2002, the total number of calls jumped to 800, and paramedics began complaining of burnout.
To reinforce the life saving program and to prevent problems, Oconomowoc Hospital agreed to pay the city $60,000 a year. Also, when city paramedics transport Oconomowoc patients to other hospitals, the city keeps the transport fees. Carlson says those fees amounted to $143,978 last year. The arrangement between Oconomowoc and Delafield was the nation's first inter-facility transport agreement between a hospital and a municipality.
Today, Delafield employs seven full-time and nine paid-on-call paramedics. As a result of the agreement, the city's budget has increased by about $130,000 a year, Carlson says. “We use that money to hire additional paramedics, who are then available for other calls,” he says. “The program has been a real win-win for the hospital and the community.” So much so that nearby Brookfield, Wis., and Elm Brook Hospital recently inked a partnership patterned after it.
You name it
Raising revenue by selling naming-rights also is a hot topic for city and county managers. “The idea of having a new stadium, even a Little League stadium, and not having that sponsored by someone will disappear,” Borak predicts. Nonetheless, selling sponsorships — from advertisements on city buses to conference rooms in government centers — is still an under-used approach.
Increasingly, however, communities are becoming more aggressive about seeking sponsorships, Borak says. Some send staffers to schmooze with local businesses and pitch the benefits of naming-rights deals. Others look more closely at the revenue-generating potential of their existing assets. Arvada, Colo., for example, sells sponsorships on its local television channel, KA-TV.
Although the city of slightly more than 100,000 residents is barred from running outright advertisements on the channel, it can run “sponsored by” notices similar to those that appear on the Public Broadcasting System, says Maria VanderKolk, assistant to the city manager. “These [advertisements] generate somewhere between $5,000 and $10,000 a year and allow us to do a little more with the station,” she says.
But VanderKolk says government broadcasts and publications must convey a dignified, impartial tone. Arvada has considered selling sponsorships to its newsletter but considers its official Web site off-limits to commercial messages.
Some critics, including presidential candidate Ralph Nader, decry the naming-rights trend as an example of “creeping commercialism” that threatens the integrity of public institutions. “As long as the advertising is low key, it's usually not a bad idea,” Borak counters.
Another man's treasure
Transforming a budget-busting liability into an asset is every city manager's dream. Jay Krauss, city administrator for Sturgeon Bay, Wis., saw such an opportunity when he learned Houston-based Waste Management had its eye on a city-owned transfer site. “Our trash became somebody else's valued commodity,” he says.
In December 2002, Sturgeon Bay, a maritime community with about 10,000 residents, sold the transfer site to Waste Management for $76,400 and agreed to deliver its recyclables and solidto the company for 20 years. In return, Waste Management lowered Sturgeon Bay's disposal fees from $55 to $34 for the life of the 20-year contract. It also agreed to pay the city an 83-cent royalty on every ton of waste passing through the transfer site after 2012.
Krauss, who notes that most municipalities in the county still pay tipping fees of $47 or higher, predicts thewill save Sturgeon Bay at least $1 million. The city negotiated such beneficial terms, he explains, because it realized not only the allure of its transfer site, but also the value of its trash. “We generate roughly 40 percent of all solid waste in [the county],” Krauss says. “Whoever was going to operate that transfer site needed our volume.”
That ICMA's “50 Creative Finance Tools” seminar last year actually produced more than 100 innovative ideas shows the extent to which squeezing more out of municipal assets — from ambulance crews to truckloads of trash — is becoming a hallmark of governmental finance. That is no surprise to Borak, who describes city and county managers as a tenacious breed. “When you need to get something done,” he says, “they're usually the ones who can do it.”
Joel Groover is an Atlanta-based freelance writer.
Small towns find strength in numbers
Small-town managers are accustomed to relying on their own creativity to boost the bottom line. They also tend to be short-staffed and extremely busy. As a result, many never get around to researching local government finance initiatives run by larger organizations.
“Usually, the smaller the operation, the less they want to get involved in these programs because they can be complex and seem hard to do,” notes Steve Swendiman of the Financial Services Center at the Washington, D.C.-based(NACo). However, several programs have been developed to help small governments financially.
NACo's NationalAlliance helps smaller governments protect themselves from lawsuits by bringing them into compliance with tricky federal and state employment regulations. “When you have 12 employees in the whole county, this can be hard to do by yourself,” Swendiman notes. NACo also jointly sponsors the U.S. Communities Government Purchasing Alliance, which helps public agencies save money by pooling power.
Swendiman urges small communities to learn more about tax-exempt leasing and other tools, and to take advantage of the financing pools operating in their states. In California, for example, 383 public agencies belong to the California Statewide Communities Development Authority, which offers financing at a dramatically reduced cost.
“This is cash-flow financing that local governments will use for the year,” explains Norma Lammers, deputy director of administration. “Typically the cost of issuance for participating entities is less that what they would pay just for the credit rating alone on a loan they would do themselves.” Through the economies of scale offered by such pools, the California authority helps its members do everything from build jails to buy low-cost pension-obligation bonds.
Risk pooling is another useful tool to save money. In Northeastern Illinois, for example, the Intergovernmental Risk Management Agency (IRMA), based in Westchester, Ill., insulates its 76 members from the fluctuations of the private insurance market. “The market has severe cycles where sometimes coverage is not only unaffordable for local governments, it's unavailable,” says Dan LeTourneau, IRMA's director of risk management. “In those kinds of crises, pooling provides stability, custom coverage and extensive services focused on loss-prevention.”
— Joel Groover