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updated: 8/31/2012 10:31 PM

Number of governments in U.S. shrinks for first time since '70s

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  • Bloomberg NewsRobert Litan, director of Research for Bloomberg, speaks during the Bloomberg/2012 Tampa Host Committee Economic Development Series Panel: Regulation and Restraint inside the Bloomberg Link during the Republican National Convention (RNC) in Tampa, Fla.

    Bloomberg NewsRobert Litan, director of Research for Bloomberg, speaks during the Bloomberg/2012 Tampa Host Committee Economic Development Series Panel: Regulation and Restraint inside the Bloomberg Link during the Republican National Convention (RNC) in Tampa, Fla.

Bloomberg News

As a debate rages in Washington over the growth of federal power, the nation's local governments have halted their upward spiral for the first time in four decades.

The number of governmental units, ranging from county seats to special-utility districts, fell to 89,004 in 2012, a 0.5 percent decrease from the 89,476 counted five years ago. The decline marks the first drop in the number of local governments since 1972, according to preliminary results released yesterday by the U.S. Census Bureau.

"This is likely a reflection of fiscal realities," said Joseph Stefko, president and chief executive officer of the Rochester, New York-based Center for Governmental Research. "We're seeing more belt-tightening across the country. I don't see any political or ideological driver for these trends."

Between 2007 and 2012, local government employment shrank by more than 300,000 people, or 2.2 percent, more than four times faster than the reduction in the number of governments, Bureau of Labor Statistics figures show. Between 2002 and 2007, the number of governments grew 2.2 percent, according to the Census Bureau. During the same period, BLS figures show local government employment grew by 4.6 percent.

"It's a modest decline, but still a halt in the expansion of government," said James M. McCormick, chairman of the Iowa State University political science department. "This is most likely a reflection of the economic pressures faced by local governments."

Maryland Leads

Republicans have assailed President Barack Obama for expanding the federal government's reach. When Representative Paul Ryan accepted the party's vice presidential nomination in Tampa, Florida, on Aug. 29, he said, "The choice is whether to put hard limits on economic growth, or hard limits on the size of government, and we choose to limit government."

The Census Bureau reported that 16 states increased the number of governments in the last five years. Leading the nation was Maryland, where government entities grew 35.5 percent to 347. Most of the state's local government growth occurred in "special-purpose" districts that are responsible for functions such as libraries, parks, hospitals or utilities.

In Ryan's home state of Wisconsin, where debate has raged for the past year over Governor Scott Walker's curbs on the collective-bargaining abilities of public-employee unions, the number of local governments grew to 3,123, up 0.1 percent from the 3,120 in 2007.

D.C. Holds Line

The number of entities in California, which had faced a $16 billion state budget deficit, also grew 0.1 percent. The nation's most-populous state added six local governments, increasing the total to 4,350.

New York governments increased to 3,454, a 1.5 percent increase from the 2007 tally of 3,403.

Four states and the District of Columbia reported no change during the last five years in the number of local governments, including Rhode Island. Employment there has fallen .5 percent in the past year, more than any other state besides Wisconsin, according to the Bloomberg Economic Evaluation of States.

The remaining states cut the number of local entities. Illinois, which has had the largest number of governmental units in the nation since 1962, dropped 26 governments, falling 0.4 percent to 6,968.

Fewer Princetons

New Jersey residents got rid of 2.8 percent of their governments, including the merger of two towns that shared the Princeton name with the Ivy League university. Princeton Borough and the surrounding Princeton Township voted to combine after at least three earlier consolidation attempts.

Support for the consolidation, the first in New Jersey since 1997, was boosted when Republican Governor Chris Christie offered state funds to cover 20 percent of the $1.7 million cost.

The largest reductions occurred in Indiana, where the number of local governments fell 16.6 percent to 2,694 governments. Leah McGrath, a spokeswoman for the Indianapolis- based Indiana Association of Cities and Towns, said the decline most likely is related to a 2010 constitutional amendment that capped property taxes.

Hoosiers eliminated 537 government entities between 2007 and 2012, more than the 472 net reduction for the entire U.S. Special-purpose units in Indiana bore the brunt of the reductions, falling to 737 governments, 42 percent less than the 1,272 that existed in 2007, census figures show.

"You've seen a lot of taxing districts change," McGrath said. "You've seen a lot more consolidation, ranging from library to school districts."

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