By Michael P. McGee

The weekend had been cloudy. The old negotiator looked out at a Monday dawning clear and cold. It’s been a long four months working on the agreement, he thought. How in the world had the different governmental units ever resolved their differences? He recalled the long negotiating sessions over how much power to give the new entity, how to fund it, who would have control, how to balance the interests of the smaller governments with the interests of the larger, and on and on. At times the differences had seemed insurmountable. Yet the negotiating continued and at the last, he thought, we have an agreement. It may have some faults . . . but, all in all, I expect no better and I am not sure that it is not the best.

— Catherine Drinker Bowen, Miracle at Philadelphia

The date: September 17, 1787. The place: Philadelphia. The negotiator: Dr. Benjamin Franklin. The intergovernmental agreement: The Constitution of the United States.

You thought you had it tough trying to reach an agreement with the adjoining township over joint public safety services? Try establishing a new sovereign government. If 13 different governmental units, of varying sizes, locations, politics, and interests can successfully negotiate and sign a contract to create a wholly new general governmental entity, then creating that joint emergency services authority with your neighboring community ought to be easy.

With local government budgets under the most severe pressure in 80 years, opinion leaders of all sorts are crying out for greater intergovernmental cooperation (IGC) as a path to progress, if not outright salvation. The media (oh, the media!) is filled with reports to the general effect that if Michigan local governments only would cooperate more, surely our governmental fiscal problems would be solved!

Well . . . yes, and no. One hates to say the emperor has no clothes, but let’s examine both the myths and realities of IGC.

First the myths. If one made policy decisions based upon media reports, one would quickly reach the following conclusions:

• Michigan has more local units than most states, and far more than it needs.
• Local governments don’t cooperate.
• Lots of money can be saved immediately
• if the locals would play better together.

Nice sound bite—except each of these three conclusions is demonstrably wrong. Sure, Michigan has many local units, but we’re a big state; per capita we’re a little below the average, according to information from the 2009-10 Michigan Manual. Local governments cooperate all the time; in my law practice, I can think of no public entity that isn’t cooperating with someone on something. And as for immediate cost savings, a number of studies pretty clearly demonstrate that greater cooperation can cost more money in the short run; the savings come, if at all, a few years out (www.landpolicy.msu.edu). So, if policymakers make policy based upon mythical conclusions . . . what do you think will happen? Let’s just say “unmet expectations.”

If policymakers really want to help, they can start with the major blocks to cooperative efforts by changing the law to: Allow different collective bargaining agreements to be harmonized; authorize more intergovernmental cooperation shared credit; limit recalls grounded upon IGC efforts; harmonize the boundary laws; even (gasp!) put real money incentives into revenue sharing. (The Michigan Municipal League has specific legislative proposals on each of these.) So let’s talk about IGC. But let the talking be based on facts-on-the-ground, not on myth.

Now the reality. IGC can work, and it can save real money. It takes effort, and it takes time. As with all things, there is no free lunch. Mainly it takes a lot of listening and a willingness to move out of your comfort zone.

There has never been a discussion about governmental cooperation, from the Constitution on down, that didn’t involve four central (and difficult) issues: Control, funding, dispute resolution, and dissolution. Address these issues and you are almost there.

The Mechanics

What legal tools exist to permit cooperative arrangements? There are three general statutes empowering Michigan municipalities to carry out any common undertaking jointly, or to transfer a common function from one municipality to another:

Public Act 35 of 1951 broadly authorizes municipal corporations to enter into contracts with other municipal corporations “for the ownership, operation, or performance, jointly, or by any one or more on behalf of all, of any property, facility or service which each would have the power to own, operate or perform separately.” Act 35 specifically authorizes a municipality to furnish services outside its corporate limits, a helpful provision. The key condition of Act 35 is the requirement that the subject matter of the contract pertain to a property or service that each municipal party has the power to accomplish separately.

The Urban Cooperation Act of 1967 (UCA) is another general statute of considerable flexibility. The UCA requires that the joint exercise of power be by written interlocal agreement. It also specifies certain provisions to be included in the interlocal agreement, including the purpose and term of the agreement, composition of any administrative entity created by the agreement, funding sources and revenue allocation, employment matters, handling of liabilities, fund accountability, dispute resolution and others. Each party to the interlocal agreement is required to appoint a member of that commission, board or council.

The Intergovernmental Transfer of Functions and Responsibilities Act (ITFRA) is a companion statute to the Urban Cooperation Act. It is designed to permit municipal corporations to transfer from one organization to the other a function or responsibility most easily carried out by the transferee. The law allows two or more local units of government to contract to transfer functions or responsibilities to one another if all parties agree. A county and a township may agree, for example, that the county will carry out the responsibilities of providing water and sewer service to the township. Or a city may agree to provide police protection to a township. Any such contract may be administered by a joint commission or board.

In addition to agreements which may be crafted for various purposes under Act 35, the UCA and ITFRA, other statutes permit cooperation on specific services, including statutes covering:

• Joint provision of police and fire services
• Emergency services
• Joint township fire protection
• Parks and recreation
• Water, sewer and solid waste disposal
• Libraries
• Avoiding the Pitfalls

What are the obstacles to successful cooperative arrangements? Employment and benefit concerns and the impact on collective bargaining units can be difficult issues. Assuring clear lines of authority and control and allocating revenues and obligations are other major structural points to be overcome. To this traditional list add conflict-of-interest and incompatibility issues which are becoming more common. The adage “an ounce of prevention is worth a pound of cure” is especially applicable here. Successful agreements deal with all these points.

Local government leaders are being challenged by current circumstances to “think outside the box.” Cooperative ventures with other governments to provide service more efficiently is one way to do just that. Michigan legal authority to enable cooperative provision of public services is well established, freeing local leaders to be creative. So go forth and establish your own more perfect Union.

Michael P. McGee has practiced municipal finance law since 1982. He is a principal in the Detroit office of Miller, Canfield, Paddock and Stone, PLC and is a past Livonia City councilmember. You may reach him at [email protected] or 313-496-7599.