This is another commentary in Civic Way’s series on reconstructing American government, a more detailed look at the state-local issues presented in our last newsletter. The author, Bob Melville, is the founder of Civic Way, a nonprofit dedicated to good government, and a management consultant with over 45 years of experience improving governmental agencies across the US. Our earlier commentary on the collapse of American Federalism provides a useful foundation for this analysis of state and local government relations.
- For American federalism to work well, we must change the way in which state government interacts with and oversees its local governments
- State governments have largely ignored one of the most important issues facing America, the relationship between state and local governments, including the issues of regionalism, localism and local autonomy
- Most states lack a coherent strategy for maximizing the cost-effectiveness of local governments and strengthening regional capacities for streamlining services and competing in the global economy
- States too often impose mandates on local governments (e.g., regulations, services or costs) without providing sufficient funds to enable localities to meet those demands
- Preemption statutes have their place, but when hastily enacted without the benefit of a broader governance strategy, they can be damaging to the public interest
- States, with local input, should conduct a thorough analysis of regional issues, and design a new regional-local governance model with influential charter governments, substantive merger incentives and plans for regionalizing suitable state services
As we have learned from the pandemic, the effectiveness of American Federalism depends, in large part, on the capacity and performance of state and local government. When the federal government delegates (abrogates) responsibilities to the states—as it did with the pandemic—we can learn a lot about the capabilities of state governments. And because of the unique relationship between state and local governments, we also can learn a lot about the capabilities of local governments.
We have already addressed the strengths and weaknesses of state governments in prior commentaries and will highlight some of the most significant strengths and weaknesses of local governments in upcoming commentaries. This commentary is about the feudal relationship between state and local government, one in which local governments are subject to the limits of state law and the whims of state legislators. For whatever reason, this vital relationship has been ignored for too many years.
As state politics have become increasingly partisan and polarized—the channeling of federal politics—state legislatures have become more willing to impose their political ideologies on local governments. In recent years, this urge has largely manifested itself in the form of preemption statutes (legal handcuffs) telling local governments what they cannot do. During the pandemic, some state legislatures even tried to prevent their cities from imposing public health mandates (e.g., mask wearing and business closures). For American federalism to work well, we must change the way in which state government oversees its local governments.
A Brief History of the State-Local Relationship
Most Americans feel much closer to their local governments than they do their federal or state governments. We tend to be more aware of the local services we receive. Police, fire and sanitation services from cities and towns. Road maintenance and social services from counties. Education from school districts. A wide range of services from special districts. We may complain about these services, but we understand who delivers them.
Given the dominance of today’s cities, it is easy to forget how agrarian our nation once was. At the time of the Revolution, an estimated 95 percent of Americans lived outside of cities. To the extent Americans felt a kinship with government of any kind, it was to their state government. And from the very founding of our nation, it was state government that determined local government powers and duties. In other words, it has been well-established that local government powers are derived from the states.
It did not take long, however, for cities to emerge as hubs of commerce and culture. Our earliest cities were seaports— Baltimore, Boston, Charleston, Newport, New York, Norfolk and Philadelphia (our largest city with 40,000 residents). With the Louisiana Purchase, came Cincinnati, Nashville, New Orleans, Pittsburgh and St. Louis. With theErie Canal, came Buffalo, Cleveland, Chicago and Detroit.
More urban density brought mounting demands for public services, the kinds of services that promised safety, sanitation, streets and civilization. Local governments, like cities and towns, became the primary vehicle for delivering these services, but state governments determined the rules by which local governments operated. The resulting tension between state and local governments was inevitable and, like the tension between parent and child, at times both productive and petty.
During the 19th century, local governments, facing the escalating demands of urbanization, became increasingly frustrated by state interference. Lawsuits between local and state governments became more common. In 1868, in ruling on one of these lawsuits, an Iowa Supreme Court Justice opined that “if there is any reasonable doubt whether a power has been conferred on a local government, then the power has not been conferred.” Dillon’s Rule, upheld by the US Supreme Court in 1907 and 1923, holds that municipal powers must be expressly granted by the state and severely limits local autonomy.
Dillon’s Rule did not eliminate state and local tensions. Local governments and their citizens recognized a need for more local control. In 1875, Missouri adopted the first constitutional amendment enshrining municipal home rule. Unlike Dillon’s Rule, home rule empowers local residents to create their own local government and control taxation, spending, personnel and elections. In short, it grants local governments powers not expressly denied by the state. There is some dispute as to the prevalence of home rule. 44 states have adopted home rule charters in some form. But, according to the National League of Cities, there are 31 predominately Dillon Rule states, 8 partial Dillon Rule states (limited to certain cities) and 11 predominately home rule states (Florida limits local taxation authority).
In any event, the home rule charter movement had some success. During the early 1900s, as part of the progressive municipal reform crusade, the number of home rule charters increased significantly. Scores of cities obtained home rule charters during the 20th Century to shield themselves from state micro-management. However, the concept of local autonomy and efficacy of home rule charters have received little attention in recent decades, especially from state governments.
State Government’s Strategic Failure
The National League of Cities, in a February 2020 report, concluded that home rule charters were “no longer up to the task of meeting 21st century challenges.” The report found that cities have become too important to the nation’s economic creativity and competitiveness—among other things—to be hamstrung by hidebound state regulations. Further, it argued that state governments lack the capabilities to effectively supervise cities.
State officials may dispute some of the report’s conclusions, but few can claim they have a coherent strategy for promoting regionalism and localism. Every state is different, but North Carolina, the nation’s tenth largest state, illustrates the tentative, sometimes erratic approach of most states to regionalism and localism.
In the early 1970s, North Carolina state government created 17 regional Councils of Government (COGs), but with little funding. In 1993, the state established 7 regional economic development partnerships. While these policy initiatives reflected an awareness of regionalism, they never evolved into a coherent statewide strategy. The state never developed a uniform methodology for defining regions or organizing state services around regions. In 2014, the General Assembly eliminated the regional economic development partnerships.
Local governments—their form, structure, powers and duties—are a function of state law. Thus, states are central to any effort to embrace regionalism and localism. The failure of states to recognize regionalism and promote localism, for example, looms as one of the great, unspoken failures of American federalism. As a result, we are left with an incoherent, occasionally counterproductive policies affecting local government. State policies tend to be episodic or transactional, careening from unfunded state mandates to excessive interference (preemption) to outright neglect.
State Mandates on Local Government
Many of us have heard about unfunded mandates, but usually in the context of federal mandates. State governments also impose mandates on local government without sufficient funding.
State legislatures often enact bills requiring local governments to comply with certain regulations, perform certain services or absorb certain costs. There are countless examples of such mandates. Public school costs. Hospital cost-sharing. Medical services for the medically indigent. Public defense for indigent defendants. Domestic violence background checks. Jail standards. Missing person reports. Animal shelter stays. Road and bridge standards. Solid waste disposal. Election administration.
The pandemic has spawned a whole new set of state mandates for local governments, often without sufficient state funding. Covid-19 testing, isolation and contact tracing efforts. Public health oversight. School reopening and classroom sanitizing regulations. Covid-19 rule enforcement. Child-care for essential workers. Utility shut-off moratorium. Remote learning technologies. Broadband improvements. Election ballot mailing.
There are at least two problems with such mandates, no matter how well intended they might be. First, by failing to fully fund mandates, the state is failing to stand by its own policies. The state’s hypocrisy is exceeded only by its disrespect for local governments and the citizens they serve. Second, they are issued and imposed without a strategic framework of any kind. Governmental malfeasance.
Several state legislatures have reviewed the state mandate issue and enacted legislation to prevent or minimize its adverse impact on local governments. Idaho, Maine, Oregon and Tennessee are four such states. But the problem of unfunded or partially funded mandates is not going away, not without a more comprehensive strategic review of the state-local relationship and the opportunities afforded by a coherent approach to regionalism and localism.
State Preemption of Local Government
In recent years, many state legislatures, fueled by ideological impulses and their servility to corporate donors, have become overly fond of preemption statutes. What is a preemption statute? Essentially a law that overrides local laws, restricts local decision-making and prohibits local governments from specified actions. In short, a law that curtails local authority and weakens local government.
The scope of these state preemption laws is broad. They limit local authority in many areas, including taxation, zoning, land use, local services and operations. Preemption laws, for instance, have proliferated to curb local action on such issues as minimum wage increases, paid sick leave, immigration, affordable housing, LGBT protection, gun control, monuments, fracking and voter rights. Other examples include:
- Alabama – in 2016, overturned Birmingham’s minimum wage ordinance
- Florida – defunded sanctuary cities and passed law in 2011 (before the Parkland shootings) fining local officials in cities with gun control laws
- Ohio – in 2006, nullified assault weapon bans and other gun control laws enacted by 80 cities, including Dayton where AR-15-style gun used to kill nine
- North Carolina – defunded sanctuary cities, curtailed local gun control laws, imposed moratorium on local environmental laws, banned local abortion coverage and prohibited soft drink size regulations
- Texas – defunded sanctuary cities, prohibited local plastic bag bans and prohibited cities from terminating contracts with companies supporting religious groups discriminating against gays (e.g., Chick-Fil-A)
State preemption statutes are on the rise, especially in red states (states with GOP-dominated state governments). According to the 2019 report, “The Growing Shadow of State Interference,” issued by the Local Solutions Support Center and State Innovation Exchange, red states have used preemption since 2011 far more frequently than other states. In 2019, state legislatures filed what the report called “a historically large number of preemption bills.”
What’s behind this surge in preemption statutes? GOP ideology is certainly one factor, especially given the 2010 elections which gave Republicans control of 25 state legislatures and 21 state trifectas (control of the executive branch and both chambers of the legislative branch). Another factor is the increased involvement of corporate interests. Following the US Supreme Court’s 2010 Citizens United ruling, corporations could increase indirect donations to state campaigns and their influence on state legislation. The American Legislative Exchange Council (ALEC), with greater corporate funding, drafted and distributed many model bills.
The preemption crusade even reared its head during the pandemic. After the President and his allies turned public health measures into political wedge issues, several red states quickly issued laws and orders to prevent cities from protecting their residents. Florida’s Governor quashed stricter local public health measures (e.g., stay-at-home orders). Georgia’s Governor overrode local beach closures. Mississippi’s Governor issued conflicting social distancing orders. South Carolina’s Attorney General challenged the legality of local emergency stay-at-home orders. This shameful ideological interference with local public health efforts not only engendered needless confusion, but may have cost lives.
The rising use of preemption statutes should be a source of alarm, not only to the citizens of red states, but to all Americans. Preemption statutes have their place, but only in the context of a broader strategic framework. Forced on local governments as ideological whims or corporate benefits in lieu of a strategy is nothing short of legislative malfeasance. It is time for states to take a comprehensive look at the power of regions, the structure and role of local governments and the state-local relationship.
Reconstructing the State-Local Relationship
Despite their outmoded structures (link) and business practices (link), state governments impose their will on local governments even when it makes little sense. Not because they are any better at delivering public services or managing public resources, or because state borders reflect actual economic and mobility patterns, but because they can. And they continue to interfere with local governments without regard to the relative capacities of those entities or any semblance of a state-local governance strategy.
States officials should set aside their pre-conceived notions, open their eyes and reexamine regionalism like a large, competitive business. One of the most profound business innovations of the last several decades has been the rise of regional distribution centers. From these centers, businesses receive, store and ship products to as many as 100 facilities or stores. Large firms like Wal-Mart own their distribution networks while smaller firms outsource the function to logistics firms. In determining the best locations for distribution centers, businesses carefully assess several factors, including customer proximity, transportation proximity, workforce quality and availability, infrastructure quality, labor and building costs and local environmental factors.
Since state government will always be geographically-constrained to some degree (i.e., states must serve a defined geographic area with rigid, legal boundaries), it makes little sense to analyze certain factors vital to businesses, such as costs, workforce, infrastructure and environment. However, states can—and should—focus on finding the best way to serve their citizens. Where do most citizens live? What is the most efficient way to deliver state and local services to the most citizens? What is the best way to market the state’s economic, cultural and natural resources to the rest of the world?
State officials, along with local officials, local government associations and civic leaders, should establish an advisory group to assess regional issues, propose a regional service model and recommend appropriate laws, policies and structures for implementing that model. They should adopt a standard methodology for defining regions, design a cost-effective regional structure for financing and delivering state and local services and chart some of the most promising regional initiatives for their areas (e.g., economic development, workforce development, transportation, utilities and broadband).
The advisory group also should design a new classification system for local governments, one that distinguishes local governments using a broader set of criteria than merely population. What criteria should be considered? Population for sure. But, also such factors as geographic size, fiscal capacity, managerial capacity, range and quality of services, transparency and accountability. Another factor, more difficult to measure, but just as important—should be regional affinity, the degree to which one locality partners with surrounding localities to share resources, deliver services more efficiently and advance regional interests.
One approach could be a three-tier classification system for local governments: 1) charter, 2) subsidiary and 3) distressed. Charter entities would be granted sufficient home rule powers to tax and serve their citizens subject to voter approval and regional policies. Subsidiary entities would be subject to Dillon’s Rule or equivalent legal doctrine, limited to those powers expressly granted by the state. Distressed entities, identified using a new early warning system, would be subject to a rigorous state-financed turnaround program.
The advisory group should design incentives for encouraging local governments to reorganize around a coherent regional strategy. Incentives, including charter status and funding awards, should be linked with metrics and milestones to encourage localities to consolidate (legally or functionally) with adjoining entities. Counties with other counties. Cities with counties and other cities. Special districts and school districts with general purpose entities like counties. Functional mergers (e.g., planning, police or administrative). The fiscal incentives could be funded by borrowing against future savings from governmental mergers.
Finally, states should identify and exploit feasible opportunities for regionalizing or decentralizing state services (e.g., public health, social services, licensing, permitting, registration and transportation). With the assistance of the advisory group, states should adopt a uniform organizational structure for regionalizing the delivery of state services (i.e., a single cross-agency regional structure). In addition, states should establish regional service hubs and continually seek opportunities for relocating state operations to those hubs.
This is a bold (some would argue a naïve) idea. Upending the feudalistic relationship between state and local governments will face considerable opposition, especially from those invested in protecting their fiefdoms. But, if we can find the courage and resolve, we can transform the state-local relationship and tap the unrealized potential of American federalism. A reinvigorated network of state, regional and local governments will save money, streamline services, strengthen accountability and unleash our greatest local assets.