As the battles over new municipal governance structures heat up in many communities across Ontario, studies are being bandied about by pro- and anti-merger proponents claiming enormous cost savings for their preferred governance models.

Indeed, it seems many consulting firms are doing a booming business projecting cost savings if "this" or "that" model of governance is adopted. With all these conflicting studies, who are taxpayers to believe

The best answer is to work from past experience to see what costs will be incurred in municipal consolidations, regardless of the model chosen.


Human resources costs. Proponents of municipal mergers will always identify reductions in staff through streamlining and ending duplication as a major cost saving resulting from consolidation. The question to ask is whether long-term cost savings outweigh short-term labour attrition expenditures.

These include severance costs, buyout packages and unpaid sick and holiday leave. When we're dealing with hundreds or thousands of affected employees, these costs can quickly run into the tens of millions of dollars. Taxpayers need to ask the "high priced" consultants if they've factored these costs into their studies.


Information technology. Another major administrative benefit touted by mergermania proponents is streamlined administration and harmonization of competing technology platforms across various organizations. But harmonization has a price. Moving to one platform usually entails a considerable purchase of new computer hardware and software, not to mention the disposal of old machinery. Another major administrative benefit touted by mergermania proponents is streamlined administration and harmonization of competing technology platforms across various organizations. But harmonization has a price. Moving to one platform usually entails a considerable purchase of new computer hardware and software, not to mention the disposal of old machinery.

Then files need to be converted, data needs to be transferred and employees need to be trained on new applications and sometimes, work flow processes. Couple this with employees struggling under increased workloads and the costs can be enormous. Again, the "high priced" consultants with their "cookie cutter" studies need to 'fess up to the true costs of this shock to a new merged organization.


Collective agreements. Unionized and non-unionized employees hare every right to be fearful for their jobs in municipal mergers, as job losses are inevitable. Those that remain through seniority and bumping then demand of their union leadership some solid working conditions. As municipalities merge, so do bargaining units and the new larger units that evolve tend to engage in "averaging up" in their negotiations with management for new collective agreements. Averaging up refers to the tendency for new collective agreements to gravitate toward the highest salary and best working conditions from amongst the pool of old collective agreements. Again, these costs must be weighed against the status quo.


Service levels. Another factor in municipal mergers where costs can escalate is an "averaging up" phenomenon in service levels. Ratepayers in municipalities with twice a week garbage collection will usually insist on the continuance of this service level. And once disparities in service levels are known, other areas in new merged municipalities may also insist on equitable (read: more service) service treatment.

These issues and costs must be adequately addressed in any studies which point to cost savings under "this" or "that" model. Next week we'll turn to the flipside of this municipal coin and look at areas where real cost savings can occur, especially when it comes to new models of service delivery.