Why Townships Matter

August 10, 2010

For release noon Aug. 9 and thereafter (735 words)

Even school children recognize and respond to the personalities of politics. Given a quick across-town drive, a young Hoosier on Memorial Day managed to shake hands with two mayors, one leading the South Bend “West Side Parade” at 8:15 a.m. and another on Main Street in Mishawaka at 9 a.m. Other politicians worked the sidelines, their names and functions not as well recognized.

At a recent neighborhood party, however, less than half the adults present were able to identify their township. And most admitted to their chagrin that they were clueless as to congressional, general assembly or county-commissioner district numbers.

The discussion turned to local taxes (the federal marginal tax rate being off-limits socially). Some consensus prevails that about 3.4 percent of taxable income plus sales tax revenue, now 6.5 percent, goes to Indianapolis. These folks guessed that another 1.25 percent of taxable income, more or less, goes to county government. This revenue is shared with city government and school districts that receive as well the one percent collected yearly on the assessed value of a family’s primary residence. The nuances of homestead exemptions, the County Option Income Tax and the County Economic Development Income Tax are beyond most of us, merely trying to hang onto jobs and bring home the brats.

So wouldn’t it be simpler and more efficient if all these taxing authorities and their functions were centralized?

No, it would not. The value of fiscal federalism is recognized in the study of economics, sometimes defined as “the science of efficiency.” There are distinct ways in which local government provides benefits that centralized government cannot. We should recognize them. In other words, we should know our township.

In general, areas flourish when they are permitted to make as many decisions as possible at the lowest level possible. It makes sense to finance and provide national defense, bridges and highways beyond the local level. Certain allocations, however, emergency rooms and education being examples, represent regional demographics. Ideally, local government adapts more quickly and efficiently than centralized government to changing circumstances. And within some range we should not expect the portion of local finance allocated to libraries, say, to be uniform throughout the state and from year to year.

Each family allocates its income between housing and recreation in a different manner, as does each community.  Even for those advocating a state/national curriculum, it is desirable that vocational programs reflect local occupational opportunities and expertise. The cost to construct and maintain a mile of highway will differ from place to place depending on terrain. And diverse communities celebrate certain national holidays more or less intensively according to local preference and tradition.

n many instances, then, variety is the spice of life. Local government units learn from and compete with one another. The economist Charles Tiebout observed how residents vote with their feet by moving to obtain their desired package of local services at the least cost. Relocations do not disparage either individuals or local communities; they represent free choice. Every town is limited by the quality and quantity of public goods it can offer. On a trivial level, one city may offer great public tennis courts and beach volleyball. Individuals have different values and interests, and it may be easier to move than try to change local politics. One family may locate where public schools offer a program suited to the special needs of a particular child, or another family will move to an area providing services for senior citizens. A community that chooses to retain a variety of households will take care not to excessively tax one group to provide services for another.

Now, if I can get the children of North Central Indiana to learn that they reside in the 2nd Congressional District . . . and as soon as they can identify their township, they can figure out that District H006 and District S10 represent their interests in the Indiana General Assembly. In addition, they should be made aware that their allegiance rests with the 3rd District county commissioner and the council member representing District G.

Got that, you adults?

Maryann O. Keating, Ph.D., a South Bend resident and an adjunct scholar of the Indiana Policy Review Foundation, is co-author of Microeconomics for Public Managers, Wiley/Blackwell, 2009.


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