Municipal Disincorporation in the News
In my recent study of government in Missouri, I wrote about the potential advantages of disincorporation for Missouri municipalities. I wrote:
While contracting with the county is a far more efficient use of tax dollars than would be entailed by every municipality using its own employees to perform every service, residents of certain cities in the county could get the same level of service, for less tax money, through disincorporation.
Now it looks like the financial crisis in making me quite the seer. Yesterday’s Wall Street Journal and today’s Washington Independent both have articles about municipalities around the country that are looking at disincorporation as a way to escape financial situations that are no longer sustainable. These decisions are being forced by economic reality, while my analysis of some smaller towns in Missouri (mostly in St. Louis County), entailed the benefits of a more reasoned decision to look at the costs and benefits of being a small city in a big county.
There is one important difference between disincorporation in St. Louis County and the examples given in these articles.
In California and many other states, the county or state must approve such a move, he said. Most counties are ailing as badly as cities, and are unlikely to readily approve a disincorporation, he said.
With St. Louis County’s unique sales tax pool, disincorporation would automatically mean more money for county government, because the pool is divided by population, and St. Louis County’s share is determined by its unincorporated population. If cities disincorporate, that means more people in the unincorporated area and more sales tax money for the county to provide services like police and roads.
I don’t know of any Missouri cities that are on the verge of disincorporating, and in areas other than St. Louis County it would probably be a more burdensome process for the remaining governments. But it is an important option for cities in Missouri to consider, and for taxpayers to keep in mind, every time some tiny city tries to enact another tax increase.
