Voluntary amalgamations of municipalities: process and outcomes.
Georg Sootla, Sulev Lääne, Kersten Kattai Tallinn University
1. Amalgamations and agenda for local government reforms
The extension of welfare state as well as its crisis in 1980s (Brans 1992,
Kjellberg,Dente 1989, Wolmann 2003 in Kersting&Vetter) fuelled the needs in
substantial reforms of local governance. One of the directions of reforms was local
government amalgamations. Amalgamation reforms have had a very different aims,
mechanisms of implementation and outcomes. These reforms are to some extent
analyzed in country studies (Schaap 2007; Vojnovich 2000) Christoffersen 2005), but
to lesser extent in comparative perspective (Aalbu 2008, Dollery et.al. 2008, De
Ceunic (2007),). Reforms are very often analysed at the level of reform rhetoric and
intentions, which are poor guidelines for causal analysis of actual processes. Of
course the reform strategy or statement would be important source and variable of
reform outcomes, but amalgamation reforms frequently have different hidden agenda,
among them agenda for improving the political power basis of leading reformers i.e.
electoral success. Thus reform process and organisation would be the important
dimension in analysing and predicting the outcomes and outputs of reforms.
The elaboration of this new dimensions of analysis of amalgamation reforms would
have special importance for several reasons. Firstly, amalgamation reforms have been
mostly analyzed as merely (narrowly) administrative-territorial reorganisations and
discussions abut these reforms focussed narrowly on the issues of size and efficiency,
size and democracy (Dah.&Tufte Larsen 2002, Rose 2002). These debates have
provided invaluable analytical framework for the understanding the size issue, but
they can contribute only indirectly to the understanding the internal potential of
amalgamations reforms. Moreover this narrow and instrumental stance does not
enable to understand the possible links of amalgamation reforms with other local
government reform initiatives (Caufield&Larsen 2002). The focus was somewhat
extended by Krestin&Vetter 2003, but the amalgamations have rarely considered
(Council of Europe 1995) as generic reform instrument for systemic solution of issues
of local government roles as well as issues of intergovernmental relations. The
second, the narrow approach can consider the tools – like cooperation or contracting
as – not as alternatives to the amalgamations (Dollery et.al. 2005) but as premises or
follow-up tools that may make amalgamations’ impacts more profound. The third,
the outcomes of LG amalgamations have considered first of all from the perspectives
of changes in effectiveness and democracy or functions/ competences acquired or lost.
The institutional context and reform process has not been considered as a variable that
might influence outcomes. Although impact of amalgamations on local politics has
been studied (Kjaer 2009,), the analysis of amalgamations on internal structures of
governance is almost absent. The fourth, debates over size has been based mostly on
the positivist (public choice) methodology than counts only the agents’ perspective
and micro-level of analysis. (Boyne 1991). This perspective is thus methodologically
biased (Keating 1995), for it do not accept wider and institutional impacts. Maybe this
was justified in case of traditional mergers in 1960-1970-s that were mostly
instrumental responses to welfare state expansion. But it could not be accepted in the
age, when variables such as global governance and increase in uncertainty and
ambiguity in institutional environments have posed challenges to institutional
patterns. The fifth, the amalgamation debate has remained, - because of neglect in
institutional dimension -, in the framework of traditional understanding of
intergovernmental relations as a set of carefully fixed and legally defined tiers on the
one hand, and traditional perception of local autonomy either from libertarian or
communitarian perspective. In CEE countries the intergtovernmental relations are
perceived even from perspective of defensive democracy (autonomy) (Sootla et.al.
2001). Thus, current analysis of intergovernmental relations and practices of
amalgamations reform must be based on the extended concept of subsidiarity and
multilevel governance. This was understood by F. Kjellberg already at the beginning
of 1993 (Kjellberg 1993) as the integrative approach to IGR and summarized in
comparative perspective by his followers (Montin&Amna 2000). The most radical
view in this issue was promoted by H. Baldersheim (2001: 209) who states:
“Local government reform in European countries has been a pursuit of two himeras:
the ideal size of municipalities and the ideal division of functions between levels of
government. ..The precise municipal size and functional distribution are not at all
important for effective governance. What is important , however, is the pattern of
coordination across levels of government, or the mode of multi-level governance.”
Thus from the perspective of multilevel governance the amalgamation as redesign of
boundaries and concentration per se would not be useful and effective tool of redesign
of institutional patterns of governing vertical. We expect that amalgamations are
feasible as soon as they are producing certain institutional effects in order to introduce
(or move towards) the patterns of multilevel governance. The impact of reform
process and organisation of reform (type of reform) on outcomes would be especially
important dimension of analysis in studying the role of amalgamation reforms.
2. Key issues of the process of amalgamation
Amalgamation reforms are rather clearly located geographically: the boarder-line
between those countries / regions which have chosen amalgamation as the tool of
capacity building and those that are not is following almost exactly -- with some
exceptions -- the along the protestant-catholic cultures (what is more important) in
countries/ regions where autonomous/ dual pattern (Leemans 1970) of central-local
relations were established. This is some sense paradoxical. Countries with more
centralized / fused system of local government where the latter have been arm length
of central (state) authorities and where possibilities to impose top down reforms are
much higher have used amalgamation in exceptional cases, and put emphasize on the
mechanisms of inter-municipality cooperation that dates back in France as far as 1890
(Council 1995: 143). Why? In Continental/ Napoleonic world the preservation of
huge number of small communities can be explained by strong tradition and more
conservative stance of local community members, i.e. the prevailing of traditional
values of autonomy. (There are for instance three municipalities without any
inhabitants in France in the areas of battle during I World War). In Anglo-American
word the intensive amalgamations could be explained by majoritarian policymaking
style and libertarian values that promote exit option among citizens and a very
instrumental/ calculative values of local government (Wolmann 1995). In Nordic
countries the local communities are strong and also very oriented on values of
autonomy and self governances. But in these countries municipalities – although they
were before amalgamations larger (in number of population) – rather easily agreed
with the amalgamations initiated by the government and passed two waves of mergers
after II WW. As a result in Nordic area the role of public servants of municipalities in
the total number of public servants in the country was in Denmark 73%, Finland 74%
(both before new wave of mergers) and in Sweden 58%, as compared with 20% in
France, 14% in Italy, and 22% in Spain, but in Germany, where considerable
mergers were in Northern lands in 1970, this proportion is 37% / . (Managing Across
levels 1997:37). Why they agreed to replace the traditional community based
municipality with larger and service based area-municipality? My hypothesis is that
local authorities see and were able to negotiate in these countries not only changes of
boundaries but also profound institutional changes, first of all the development of new
power balance that would restrain general centralizing and globalizing trends in the
modern world.
So we can differentiate two dimensions for the analysis of amalgamation reforms. In
the first dimension we evidence on the one hand instrumental aims and outcomes
that could improve performance of local service delivery via the changes of
boundaries. Very often these reforms reduce the immediate scope of municipal
authorities through the contracting out services to private sector and even formation of
“virtual government” in Australia (Dollery et.al. 2005) On the other hand we
evidence comprehensive institutional reform along all governing vertical from
intergovernmental relations to internal structures of municipality and to the citizens
as beneficiaries. This kind of reforms we see in Denmark (2007), Latvia (2009). In
Germany the logic of multilevel governance was introduced through the territorybased administration and vertical cooperation (Wolmann 2003). The variety of
reforms in this dimension is not expressed in the different radicalism or intensity but
in different types of outputs and outcomes. Often very fast and overhauling reforms
can produce minor outcomes whereas gradual reforms of critical point (so called
butterfly effect) can produce very deep institutional changes.
In the second
dimension we evidence on the one hand completely top down reforms and on the
other hand completely bottom up reforms, whereas the majority of them hybrids that
are closer to one or another end of continuum. The supplementary dimension that
must be taken into account is politicisation of reform or vice versa, considering the
aims of reform as purely technical-analytical task.
Hence we can develop the typology that enables more structured analysis of various
practices of reform process.
Figure 1. Types of amalgamation reforms (hypothetical location)
Top down
Strategy for institutional
changes
Denmark 2007
Mix
Finland (PARAS reform)
Bottom up
Strategy for instrumental
changes
Australia (Victoria) 1995,
Canada (Ontario)
Australia (Queensland),
Canada (New Brunswick)
Estonia
This variety of amalgamation reforms is extensive and for detailed comparison in is
necessary to have much profound empirical data collection and analytical work. In
current study we focus on the one of type of amalgamation reforms – on completely
voluntary amalgamations in the context when other possible elements of LG
development (i.e. the cooperation of municipalities) will not play important role and
the government or other actors do not play any mediating or coordinating role (except
technical-legal consultations) in the actual reform process. This has been the case in
Estonia from 1996 onwards.
We have to define also results and outcomes that initiators of amalgamations have
intended and that are possible to achieve. I would break these outputs into three
general groups.
The first class of outputs are instrumental improvements in performance and quality:
economy (of scale, scope) and efficiency; synergy from increased critical mass due to
increased scope of budget which can be analysed well quantitatively. The qualitiative
improvements at the government are the increase of professionalism and
specialisation etc. There could be also quantitative changes in democracy: increase or
decrease in political participation; changes in the support etc.
The second class of outputs and outcomes are changes in internal structure of
municipality that would cause qualitiative changes in internal integration and
supplementary balances between actors, changes in civil society organisations,
changes of roles of councillors, council and government and their interrelations etc.
These are structural changes that define the general capacity of municipality ( and its
actors) in intergovernmental relations and channels of multi-level governance.
Amalgamations may simply transfer previous practices of government and
organisation of municipality to the new enlarged unit or foster some techniques of
management, for instance extension of practices of contracting out. These changes
can increase the effectiveness or quality of services but can simultaneously worsen
outcomes in the other dimensions of public life because of changes in social
environment and space: in transparency, accessibility and accountability, in social
integration. Thus simple changes in structures and techniques are not obligatorily
producing meso-level institutional changes, but may on the contrary foster some
controversies that did not appear so clearly in the old (smaller) community, and new
actors cannot respond adequately to the new challenges and controversies that are
inherent to the new enlarged community. The main source of misunderstanding in
size-effectiveness ( democracy) debate was the presumption that the new size must
produce only favourable outputs and outcomes. Even the most beneficial change will
produce also new contradictions and source of weakness. Those challenges may be
transitional (conflicts of identities), but may be and are symptomatic for larger
communities (many of them defined in size debates, first of all in democracy and
government) and will need specific institutional responses. Moreover, lack of shifts at
institutional dimension may restrain the realisation of strength of new community, for
instance the increase of its strategic capacity via increase of strategic roles of
councillors or enabling more variety of services.
The third class of outputs and outcomes are changes in marco-level institutions. We
cannot provide full picture of possible macro-level changes because this presumes
special analysis, including the use of scenario analysis. Here we can identify some
impacts on intergovernmental relations. The first, amalgamation may result in
principal re-arrangement of the logic of tiers and their interrelations. Obviously the
large units may take the considerable amount roles of former second tier like in
Denmark and Latvia where the county level was abolished and the new level (and
type) of authorities (similar to French regions) were established that enables better to
fit with EU regional policy. (The latter is the special output of the reform.) . It is
necessary to note that the second tier is usually performing rather marginal role in
service delivery but it has a very important balancing role in traditional central-local
relations. What would happen after the abolition of intermediate level in
intergovernmental relations? To answer on that questions the practice of those
countries where the second tier is basic level must be studied first of all.
The second, the increase of the capacity and reduction of number of municipalities,
and emergence of more equal from the viewpoint of capacity units enables obviously
to develop the new power-balance between levels (including the balance in the
formation of local-national elites). This increase the bargaining powers of local
authorities and presumably also the agenda of negotiations. The third, the capacity of
local authorities and strength of their associations may shift also agenda for
development issues towards the issues that enable but also presume large
regional/horizontal cooperation (Papadopoulus 2007). For instance, it may promote
the participation of local authorities and actors in EU Baltic Sea Strategy which is
focussing on issues that are primarily relevant to local authorities operation. This
might make even more inter-governmental relations more confused: the powerful
entrance of horizontal (global) cooperation networks may substantially change the
logic of power vertical.
3. Framework of amalgamations in Estonia
In Estonia since 1996 there have been 52 municipalities from the original total of 256
that have decided to form joint local administration. As a result there are 227 local
government units in Estonia by 2010.
After the Local Government Act in 1993, the Riigikogu adopted in 1995 the Act on
Administrative Division of Estonian Territory (www 1 ), which provided rules and
mechanisms for amalgamations. In 2004 the law on “Support of amalgamation of
local government units” was adopted on 2004, (www 2) but amended in 2009.
Amalgamations in Estonia are completely voluntary and depend on agreement of
local councils (first of all of local leaders) to merge. The government provide only a
very general framework of requirements – concerning some actions and formal
documents – that should be presented to the Ministry of Interior. One among the
municipalities, who intend to merge must made the announcement-invitation to the
other councils to start the negotiation on amalgamation (that is defined as “changes in
administrative territorial organizations”). Councils who accept this invitation will
establish joint committee that must prepare amalgamation agreement. If some of
municipalities decide before the conclusion of formal agreement about amalgamation
not to merge the process will start from the beginning. The amalgamation agreement
must contain several documents to ensure minimum consistency in the local life
during and after mergers. Amalgamations have completed after the new council is
elected at the regular elections and the new mayor is appointed. There is some
transition period concerning the transfer of the validity of legal documents (as soon as
new ones will be completed) but there is not designed any special transition period for
the installation of new institutional structures. This is the process like the “building
the ship at the sea”.
4. Methodology and data
This study rely in the three empirical analysis, firstly, of the local government
capacity and cooperation (CBC 2006). It was the study of different aspect of capacity
of municipalities in Lääne ja Hiiu county with the aim to establish the cooperation
potential and opportunities in this region. The second (ETF 2007) was the study of
political profile and structure of actors in Estonian rural municipalities. The third was
the analysis of four complex amalgamation of municipalities (MoI 2008) that were
carried out in 2005 in Estonia. The first and third projects the embedded comparative
case study method was used where at the analysis the replication techniques were
applied (Yin 1994.). The survey polls were used in limited cases at these projects to
establish only general trends in capacity/ cooperation and opinions of actors on
limited aspects of amalgamations. The second was the survey poll, which enable us to
develop understanding of political profile and structure of Estonian rural
municipalities.
This article is focussed on the generalisations of data collected during those projects
and aimed in the development of general concept of voluntary amalgamations as well
as general hypothesis about the impact of the process of amalgamations to the
outcomes. Thus we must refrain from presenting details of results of these studies in
this article, which will be provided in (Sootla et.al. 2010).
As you may see in the table 1, where the data of size of our cases is presented, the
main problem of Estonian rural municipalities is the very low density of populations,
which makes larger amalgamations impossible because it may make distance between
centre and sub-regions and villages too extensive. (In Hungary, Slovak and Czech
Republic the average density of population is from 90 persons/ km2 in Hungary and
116 in Czech republic and the size on municipality from 30 km2 in Hungary to 13
km2 in Czech republic) MoI 2008
Table 1. Size of municipalities after amalgamations
New municipality
Türi
Saarde
Suure-Jaani
Tapa
Number of units
merged
Size
km2
Number of
habitants
4
3
4
3
600
707
746
263
11 256
5 016
6 200
9 115
Density of
population
(per/km2)
18,8
7,1
8,3
34,7
The extensive territory makes very urgent the need of internal decentralisation and
development of complex management structure of the new municipality.
5. The process and organisation of voluntary amalgamations
At all amalgamations those who will be merged have some autonomy to decide. The
completely top down amalgamations have been exception like in Victorian (Australia)
where even local councils were temporarily abolished and transition to the new unit
was managed by appointed from the state commissioner. (Dollery et.al. 2008)
The reverse is true also in case of bottom up amalgamation. For instance in Canada
(Vojnovic 2000) the higher (state) authorities are intervening when completely
voluntary negotiation have jammed because of irresponsible veto-play of some actors;
or state authorities are mediating negotiations and give authoritative neutral
consultations for participants (like in Finland) at difficult negotiations. In Estonia we
see, however, a specific case when actors other that negotiating authorities do not
have any role. This makes the process of amalgamation a very controversial enterprise
as the process and from the output perspective.
5.1. The scope of changes
Voluntary amalgamations are reforms at micro level and can only in some cases
concern or influence governing process even in the region (in case of changes of
boundaries of the region or boundary dispute with neighbors). So, voluntary
amalgamations can not at the outset to aspire the changes in intergovernmental
distribution of tasks/ resources or power potential to balance the central government.
Moreover, new large municipalities are treated in similar vein with small ones in the
distribution of resources or in assistance in financing service provision. For instance
for the provision of regional public transport the government provide extensive grants
to private providers. The new municipalities may be comparable with mini-regions
(with territory ca. 900 km2) butt hey are not eligible for that grants because their
transport is considered as intra-municipal. This inequality can be observed also in
investment programs and also in case of provision of other central government grants.
5.2. Sustainability of changes
The voluntary mergers are starting figuratively from nothing. There is no institutional
trigger of mergers except the will and mood of local leaders. Actually, the problem is
even more profound. In most cases of voluntary amalgamations we studies they were
not the first attempts but there were several previous attempts of amalgamations that
have failed (See also: Vojnovich 2000 ). In Canada sometimes the higher (county or
state authority) is intervening forcefully if some municipality is continuing to veto the
amalgamation process. But this is not in case of Estonia where government has no
authority to intervene. Moreover, the previous experience very little influence the next
trigger and attempt to merge; the experience of failure may even be an obstacle to
next attempts of amalgamations. I.e the process is not cumulative and partners are at
every new leap starting from the very beginning. Moreover, the voluntary
amalgamations that have been started can be reversed at any point before the
amalgamation agreement and other documents are approved by the government. This
specific of the process is the main reason why voluntary amalgamations tend to be (a)
conservative in initiating profound institutional changes during amalgamations and
(b) politicised, that enables for every participant at negotiations irrespective of their
actual bargaining potential to veto the process in order to request considerable
advantages for their municipal area.
5. 3. Persistence of traditional value of defensive autonomy
The very concept of voluntary amalgamation is deriving from traditional values of
local autonomy which is understood primarily as the tool of protection of community
from unwished interventions or even impacts from outside. This is and understanding
of uniqueness of community and its self-sufficiency: the necessity of manage its own
tasks. This is a rather strong sentiment that restrains also the possibilities of
cooperation and further delegation of responsibilities inside the municipality. The
defensive stance is characteristic not only for the perception of central-local relations
but also of the relations between neighbor municipalities. Neighbors may organize
joint events and their leaders may have good personal contacts. Authorities of town
and surrounding municipality may even locate in the same building (as it was in two
of our four cases) and to have joint private lunches. But, they are rather unfamiliar
about what happens in neighbors’ politico-administrative “kitchen”, because this the
realm of community’s “private” life. Because, as political-administrative units they
are competitors for scarce resources in the framework of centralizing power vertical in
Estonia.
For this reason neighboring municipalities know very few about each other’s concrete
practices of government and management, about true intentions of its leaders and
background of their strategic calculations. They had rarely take joint actions to solve
and manage similar problems. I.e. whereas in Nordic countries amalgamations have
been at least to some extent the logical consequence of previous (sometimes
compulsory) cooperation, the level of cooperation between neighbor municipalities in
Estonia which uses voluntary amalgamations has been negligible. Moreover, previous
practices of the use of services of larger towns by citizens of surrounding
municipalities (schools, sports facilities etc.) have in 1990s caused conflicts over the
conditions and rules of reimbursement. For this reason the absence of previous
experience had not developed enough level of trust between local authorities and
communities and perception of predictability of their behavior. The prevailing
(conservative) expectation is that mergers are useful primarily for larger centers of the
area – future centre of new municipality – and they as stronger actor would continue
the self-interested behavior during and after the mergers. So the negotiations for the
smaller partners must as much as possible to neutralized this possibility. The
negotiations are starting for this reason even not from zero base. This conservative
presumption is not weakening also because there is no institutional support in direct
(from government) and indirect (common value space) sense. This causes the
politicization of single and insufficient issues at the negotiations and the process of
voluntary mergers can even reduce the level of trust and may fail despite decision
agreement to start negotiations. So partners at negotiations could face the
tremendously difficult task: to come to the agreements beneficial for all in situation of
zero-sum game. I.e. voluntary amalgamations contain high risk not to achieve optimal
outputs even they can come to agreement.
5.4. Specific vision of problems to be solved and perspectives to be achieved.
The top down reforms are trying to carry out some qualitative changes and
innovations in future, let them be a bit vague and normative. The main task of
leadership is the mobilisation of actors to support these aims. The decisions about
whether to merge and under what general preconditions to merge have been already
made. Negotiations must find out ways how to do that in a way that is beneficial to
all. The type of amalgamation reforms are targeted to the aim to repair of certain
technical discords in government and community. /Alabu et.al. (2008)/. I.e.
participants are not aimed to develop a kind of new system but to improve existing
one. Voluntary bottom up amalgamations have largely the similar stance but with
important specific. Differently from bottom-up technical reforms voluntary
amalgamations do not rely on carefully prepared account about technical aspects of
governance. Voluntary merges may rely – even if leaders would have some rational
plans and reflective expectations -- primarily on some kind of “theories in use” about
possible (positive as well as negative) consequences and gains from amalgamations,
that have emerged at the level of practical conciousness. These theories in use defend
the status quo and, what is even more confusing, they cannot be overrules by
reflective arguments.
Concerning past experience these theories-in use are very often fears about outcomes
of future changes and idealisation of certain dimension of traditional community life.
For instance, there is widespread conviction that increasing distance from authorities
reduces the effectiveness of political representation; or that politicisation of
government in large municipality may harm the harmony of personal relations that
was appropriate to small community. In some cases, when the theories in use are
based on trends that may re-emerge in larger community, its arguments may serve as
point of departure for new strategies. One of such theory in use was the emergence of
peripheries which play constructive role in the design of strategy of institution
building in new municipality.
Hence is originating also the conservative stance of amalgamation negotiations and
agreements. The aim of agreements is to preserve as much as possible elements of
former community life and to change as less as possible in order not to risk to loss
even currently valued aspect of small community. Majority of amalgamation
agreements contain special provision not to initiate changes in the structure and
management of municipality until next elections (i.e. after five years) unless extreme
need may emerge (i.e. too few children attend the school).
In two from four of our cases the new elections were held in electoral districts which
were formed on the basis of ole municipalities. Each district got certain proportion of
seats in the new council. Thus the new council was formed not on the proportional
basis but on territorial basis. The result of elections were biased in favour of small
municipalities where there were only one local party which got 70-90% of votes
whereas the partisan votes dispersed between different districts.
The expectations (theories in use) about future are usually on the contrary too
optimistic a la emergence of critical mass for investments or emergence of economy
of scale. Those expectations are actually projections of current issues/ deficiencies
into future without clear understanding how those advantages would be realized in
concrete actions.
5.5. Politicisation of amalgamations agenda
Politics is unavoidable dimension of any amalgamation. The issue is not even how
much but what kind of politics is accompanying amalgamations. When reforms are
initiated and agreed at the top the politics is about core concepts and core interests of
parties. Thus the consensus over certain strategy is difficult to find but if it is founded
then the coordinated action and targeted changes are rather possible.
At the voluntary bottom-up amalgamations every partner is coming at the negotiation
table with set of demands on quarantees of single issues to retain the status quo or to
have equal benefits for the area they are representing. Area specific interests are
prevailing frequently over the interests of the community as a whole. Local citizens
are carefully watching to what extent their leaders are defending their local interests
and local leaders know that this is the main criteria of support to him/he at the next
elections into the new council. I.e. politics here is also based on single issues and
particular interests. At the same time all leaders as initiators of negotiations feel
themselves responsible for the continuing of negotiations and are very sensitive about
its possible failure. For this reason it is rather difficult not to accept demands of
partners, first of all, to continue investments into already planned sites and to
distribute future investments equally between sub-areas of new municipality. The
second most urgent issue is the level of remuneration of public sector employees.
Usually the highest salaries are established in the new unit. The solution of both
issues in manner that can suppress the potential conflict at negotiation may
considerably increasing fiscal pressures to the new budget. At the same time we did
not identify in our cases any attempts to count the exact increase of expenditures in
the future budget.
At those mergers in which the town centre dominates these pressures were least
because the town authorities as the most interested actor did not escalated their
demands and frequently made concessions to smaller remote areas (former
municipalities). In those mergers where smaller areas (municipalities) coalesced and
were dominant side at negotiations these pressures were rather severe mostly because
the dominant theory in use was that in the new municipality the interests of the centre
will prevail at the expense of surrounding areas. Thus negotiations was seen by them
as the last chance to attract investments to their area. This strategy would also be
result of pressures of public opinion in rural areas to their leaders, who would like to
demonstrate – before elections – how much they are caring about interests of their
area’s inhabitants.
Especially forceful have been pressures from the local elites of municipalities
surrounding the town, who have usually less interested in mergers. Citizens of those
municipalities are mostly consumers of services that are provided (and managed) by
the town authorities and reimbursed by authorities of surrounding municipality. The
must not worry about organisational and other problems concerned with the provision
of services, but can contest the conditions of reimbursement. For instance, from 400
children of surrounding municipality, who attended a school only 100 attended school
of their own municipality. This trend of mobility is characteristic to the consuming
majority of services. Citizens of surrounding municipality who needed administrative
services can do that in town because its authorities are located in town. So, for
inhabitants the amalgamation would not change much. But mergers would matter a lot
for local elites, especially for officials. Leaders of surrounding municipalities had two
clearly opposite strategies. One of them – usually backed by local business -- were
pessimistic about future of their municipality and thus actively supported mergers.
The other tried to organize joint position of rural areas vs. town authorities based on
widespread conviction that rural areas are losers from mergers at least in long term
perspective.
One of most difficult transformation is the formation of new administration. Problem
is not so much in need to reduce the number staff, but in relevance of professional
knowledge and skills of former generalists-employees in the new context when they
must hold positions that presume specialisation and professional knowledge. This
problem can be solved by effective retraining of officials. Unfortunately the voluntary
amalgamations cannot provide necessary time and resources for capacity building and
re-recruitment of officials after substantial re-training. Municipalities have chosen for
this reason the most conservative scenario to staff transfer: majority of appointments
are prepared before mergers and new vacancies are filled by internal competition. So,
actually the staff with outdated qualification or retiring-age persons or those who have
found more challenging work will leave the office and other are transferred peacefully
to the new administration where they acquire the new skills in office. It may take for
staff a year or even more to adapt in the new roles.
5.6. Preparatory activities: needs and possibilities
Every reform must have some transition period when old structures and practices
must be abolished and replaced by new structures and practices. Substantial
innovations inevitably cause disturbances in the system, but the everyday functioning
of the organisation must be ensured and necessary services and outputs must
provided. Amalgamations are more radical reforms because this is merger of very
different organisations: with different cultures, management practices, with different
suppliers and contractors. For this reason the merger cannot be rapid and forceful
unification of this variety under the single and hierarchical management but as
gradual integration of this variety into one. (MacKay 2004)
There are at least three dimensions that must be harmonized as soon as possible.
The first are contracts with suppliers and service providers of old municipalities that
must be analysed and revised into one strategy of supply and contracting. Obviously
contracts of old municipalities in similar areas may be made under very different
conditions (prices, obligations, sanctions) and contracts that are not beneficial for
authorities can be revealed and cancelled.
The second, policies and regulations of municipalities in different areas might be not
only different but contradictory, simply because rules of conduct and standards in
towns may differ from rules and standards in countryside. One big issue is the
management of real estate and assessment of its value. The other, more romantic
example are the rules of holding pets that in town is obviously different than in
countryside. If the latter can cause emotional problems in developing similar rules for
different contexts, the joint management of real estate must be organized at the outset.
Thus all policies must be at least in some dimension revised and re-designed before
general strategy of innovations is adopted.
The third, cultures, practices, and traditions of management, communication and
finances even in rather similar and standardized organisations, like libraries,
kindergartens, schools, are actually very different although they may act in the
framework of similar rules.
It is urgent not only to make sense of differences but – what is more difficulty – to
find ways how to integrate this variety under the single management. I.e. old and new
elites must have very clear picture about ways of transformation towards new
structural configurations. This is relevant also for understanding new roles and
professional requirements of new government institutions and employees. There are
two important variables that could heavily restrain the preparation and
implementation of these changes.
The shortage of time. Amalgamations are organized as extraordinary local change in
the framework of regular general elections and all the timing and logic of the
amalgamations must conform to electoral process. According to the Law the
amalgamation agreements must be concluded at least six month before new council is
elected. Elections in Estonia is held in October, so majority of amalgamation
agreements are concluded in April. From that point the actual preparations can be
launched at least in dimensions that we defined above. But this is most busy time in
rural areas and electoral campaign have already launched. Former partners must now
ensure their re-elections. As soon as reorganisation commissions are chaired by local
leaders they can prepare minimum formal requirements that enables to form the new
municipality, i.e. the draft of the new statute. Although the law on amalgamations
provides that (a) all obligations and contracts must be analysed and (b) draft new
regulations must be prepared, this minimum has been done only in selected cases. So,
the actual preparation can start only after amalgamations.
Fear of new conflicts. The analysis of actual variations of management practices or
the analysis of existing contracts (obligations) may be only superficial or even is
absent because negotiating sides are not willing to have supplementary conflicts
before mergers and elections. After the elections the new authorities are so heavily
involved into everyday management issues and they have to accommodate or even
learn their new roles. Therefore the analysis and harmonisation in these three
dimensions is as a rule postponed to the future.
Amalgamations that are initiated from the top take much longer time and usually they
have clearly demarcated transition period. New elected authorities have year-two for
the redesign of internal organisation and practices whereas old administration and
councils can arrange everyday administration. Simultaneously two papallel councils
may act. So these two dimensions are clearly separated to let to the new authorities
the time and space for reorganisations. Unfortunately voluntary amalgamations cannot provide such a transition period for contextual as well as political reasons. This
reduces substantially the immediate effects of amalgamations as well as forces to
postpone the actual reorganisations to future.
5.7. After amalgamations
After elections there is short transition period when the legality of old acts are
transferred into new. Until the preparation of new contracts, new regulations, new
laws and development plan (that is obligatory in Estonia) the old acts of former
municipal council are in force. So does the municipality administration that continue
to act until the new government and administration has not been appointed into office.
But the latter period is very short (ca. 2 month).
The first managerial problem after merges is the leadership quality. The scope,
complexity and multiplicity of tasks have grown even in those new municipalities
where the centre town dominates, first of all the urban and rural specific must be
mixed. In the most difficult situation appeared to be those municipalities where the
new leadership has formed on the basis of elites from small former municipalities.
They have faced with completely new tasks and knowledge requirements in case of
almost all issues. Besides, they may transform the old management style and old
theories in use into the new situation try to institutionalize them. For this reason the
main aim for following two years has been in our cases first of all to establish and
manage current processes, and there was almost no time to focus on issues of strategic
reorganizations (even if these were provided by the amalgamations agreements). So,
three years after mergers there were very few new acts concerning general policies in
the new municipality. The new authorities were able to establish control over the
fiscal affairs and supply contracts, but this control has not been reached still the level
of concrete organizations (for instance the inventory of assets according to new rules).
6. Analysis of outputs and outcomes
The development of new administrative unit after voluntary amalgamation has far
from being the process of rational design and implementation. The very process of
voluntary amalgamations contain too many restraints that does not enable to make it
rational and well planned strategy. But, we can even in this situation speak about
some very important outputs.
6.1. Efficiency – effectiveness outputs
Amalgamations in 2005 were carried out in the period when upsurge in economy and
salaries started in Estonia. In the period 2004 – 2007 (four years) the expenditures in
three municipalities we studied increased from 52 to 71 per cent whereas the average
increase in all municipalities in Estonia was 56,8 per cent. (MoI 2007) So the context
for reforms was in general very supportive and even exceptionally favorable.
But even in this favorable context one municipality in our case was able to increase its
spending only 10% because of large investments (and loans) that was made before
mergers. In this municipality the political pressures to the fiscal basis - primarily
caused by amalgamation negotiations -- were most intensive. Thus, in this
municipality the possible restraints of voluntary amalgamations have been most
severe, whereas in other ones the efficiency outputs were positive.
The total costs of local administration increased in all new municipalities, but much
less than total increase of expenditures. The proportion of costs of administration
decreased in three cases (in one of them almost 40 per cent) but increased in
abovementioned fourth municipality 13,7 per cent. In all municipalities the number of
public servants in administration decreased up to 40%.
The second important change was the shift in the proportions of other expenditures. In
sectors which provided more standardized services that cannot be underfinanced (first
of all education, libraries) even in small municipalities the costs per capita increased
much less than in sectors/ areas which were underfinanced especially in former
smaller communities (selected examples: road maintenance, culture and sport). The
proportion of current education expenditures per capita in the budget dropped in all
municipalities 8-10% and discharged recourses were re-distributed to sectors that
were underfinanced. This is an indicator that the most obvious and important outcome
of amalgamations is – in new democracies -- not the economy of overall resources
but, firstly, the achievement of level of financing that ensures minimum quantity and
quality, i.e. issue of equity; and, secondly, the reduction of costs in sectors were
demand is too small for achieving optimal costs per unit. Fir instance, the costs per
pupil at schools was in small rural schools up to three times higher that in towns,
although the quality of teaching may have on the contrary – much lower (due to
quality of teachers and use of composite classes. These costs cannot be avoided
immediately. But it presumes profound redesign of school management system in new
municipality.
The next effect was increase of critical capacity of the development among larger new
units, which investment capacity become three times higher (in absolute terms) than it
was before mergers. So, our finding was (that confirmed also in the analysis of the
evolution of staff) that there is the critical threshold of population size that enables to
achieve qualitative shifts in capacity and positive outcomes.
6.2. Effects on local administration
The main effect of mergers was the increase of professionalisation of staff through the
specialization, considerable increase of proportion of staff with university education
and decrease of staff with old-fashioned professional secondary education. In small
communities majority of staff was multifunctional, i.e. the combine in actual work
different task-assignments. Only two positions – mayor and accounting officer – were
full time monofunctional employees. (Even CEO had in two municipalities
supplementary tasks.) After mergers the proportion of monofunctional official reach
67-69% from the staff in larger units and 47% - in smaller units. Besides, the number
of new tasks-assignments increased as much as twice in larger municipalities.
Nevertheless these changes in specialization were not enough for the development of
stable public service staff, for even large municipalities were not able to employ
certain professionals due to the lack of them in the area (architects, lawyers, education
managers etc.) So, the threshold of critical mass in building the administration is even
higher than these amalgamations achieved.
Our survey indicated several important directions of changes in the work of council
and administration. These are: substantial increase of workload of councilor in council
and in commission (that is indicated also by MacKay 2004), increased role of
administration in assisting the preparing policy proposals and specialization of
councilors on certain policy issues. To some extent there is more politics (i.e.
conflicts) in the council and relations of councilors have become more formal. At the
same time, majority do not agree that contacts with citizens have weakened
Table 2. Changes in the work of council (councilors opinion) (N=39)
Issue
Certainly
To
some
extent
Not at
all
There is more politics in the council
34,2
26,3
39,5
More time needed for the work as councillor
51,3
35,9
12,8
Amount of work in the counsil has increased
51,3
28,2
20,5
I can focus on issues that is more interesting
for me
23,1
64,1
12,8
Public servants assist better in the
preparation of proposals for the council
35,1
51,4
13,5
Less contacts with citizens
10,3
35,9
53,8
Relations between councillors are more
formal
5,3
50,0
44,7
Survey of public servants indicated that the work in the new positions presumes much
professionalism and there has been improvement of work environment that enables
more effective work. At the same time for large majority the level of
bureaucratization has increased: there is more paperwork and less contacts with
citizens, relations between public servants are more official, workload is more evenly
distributed and contacts with mayor have lessened for majority of public servants. We
get also confirmation about changed roles/ relations between council and
administration. On the one hand, assistance of councilors by public servants has
increased, but this does not mean that a kind of village life pattern (Peters 1996) have
emerged. On the contrary: majority of officials emphasized weaker collaboration with
councilors.
Table X. Changes in the work of administration (public servants assessments)
(N=44)
Issue
Certainly
To
some
extent
Not at
all
The work presumes higher professionalism
56,8
27,3
15,9
There is more paperwork, less contacts with
persons
34,1
38,6
37,3
New work environment enables more
effective performance
44,2
32,6
23,3
Relations between public servants are more
official
25,0
47,7
27,3
Workload is more even and better planned
22,7
40,9
36,4
More cooperation with councillors
4,6
38,6
56,8
Less contacts with mayor
16,3
39,5
44,2
At the same time two thirds of citizens expect that administration is dealing with
citizens problems more efficiently, but the same proportion expect that authorities are
after merges more remote from citizens.
Hence, we revealed some spontaneous, unplanned trends in the development of main
governing institutions. We evidence more dynamic balance between main institutions
and more effective role taking, whether it has positive (professionalism) or negative
(bureaucratisation, weaker links with citizens) consequences. These strength might be
increased and impacts of weakness might be decreased if changes had been intended
and planned. But in general the voluntary amalgamations may achieve certain
instrumental outputs even in the presence of considerable obstacles of their intentional
achievement.
6.3. Changes in institutional structure of new municipality.
The next set of outputs are change in patterns of actors of new municipal area and its
institutions. There are three dimensions of those patterns: institutional, organisational
and spatial. Profound structural changes can happen only in case when those are
initiated simultaneously in all these three dimensions. We evidenced in the previous
sub-chapter that spontaneous changes in council and executive and patterns of their
interactions did not produced in mid-term perspective enough clear changes in
institutional setting. At the same time we found rather clear changes in the territorial
structure of those new municipalities where it was supported by the explicit strategy
of its design. The most elaborated strategy was designed in largest municipality
which has strong town centre and least extensive territory (Tapa). But some elements
of new structure were introduced in all four cases.
According to the law municipalities must establish service centres outside of
municipal centres. When in other new municipalities all those centres were
established at the old centres of municipalities then in Tapa municipality the new
territorial sub-areas of municipality did not coincided with the boundaries of old
municipalities but mirrored the future balance of different areas and community
centres. Besides, at centers of those sub-areas the multifunctional community centres
were developed instead of service points with limited functions. In three
municipalities the community centre was not established in former surrounding
municipality centre because it was formerly located in the town centre. In Tapa it was
established also in surrounding municipal centre to ensure decentralisation of some
activities from the town also to surrounding countryside.
The second shift was the development of mechanisms of representation. Traditionally
most of new municipalities established a kind of forum of representatives of villages
and NGOs to receive feedback from them and to assist them in developing plan of
coordinated activities. This was however too top down device in triggering civil
society initiatives outside of the new municipality centre. Two municipalities
developed representation (i.e. input) channels of sub-areas at the council’s
commissions and at the executive. Representatives of sub-areas formed the mayor’s
cabinet. In those municipalities we observe also the rise of new active centres in sub-
areas and emergence of integrative trends between municipality centre and sub-areas.
Combination of territorial and institutional changes provides in some cases much
profound and lasting effect.
Amalgamations in Estonia give impetus to the considerable re-design of territorial
structure. At the same time the necessity to initiate qualitative changes in
organisational structures were not even discussed seriously in the agenda. The
underestimation of necessity of changes in internal organisation of authority and
service provision in the new municipality – except the development new territorial
structure -- is caused not only the absence of time and willingness not to trigger
unnecessary conflicts during amalgamation negotiation. It is caused large extent also
by the presence of different theories in use. In the perspective of territorial structures
there was a very strong understanding of the necessity of structural redesign and also
practical ways how to avoid the emergence of internal peripheries. The traditional
perception and understanding of local autonomy presumes often that the application
of subsidiarity principle ends at the doors of local administration. I.e. local authorities
must have substantial autonomy vs. central authorities but local actors and all public
activities must be tightly integrated as much as possible under the single roof mayors
office. (This is the focus of our other paper at NPSPA conference.) In the
development plans adopted in 2006 we found various new initiatives of improvement
of services of various organisations, but we found little intentions to redesign the
organisational structure of the new municipality in general as well as in certain
sectors. There have been only minor changes in reorganisation of management of
area-services, all of them were aimed to centralize under one roof of organisations
spread in different sub-areas of the new municipality, first of all libraries.
So we evidenced rather controversial changes in the second class of outputs and
outcomes which are cause first of all by the specific of voluntary amalgamations but
also by the strong persistence of theories in use which are reinforced by this specific.
Changes at the second level presumes much stronger reflective and mediating
mechanisms of the reforms to overcome the restraints set by voluntary amalgamations
and to provide stronger strategic component in the planning of future changes.
6.4. Outcomes at macro-level
Voluntary amalgamations can cause a very small changes in the system of
intergovernmental relations, which remains the same even after numerous
amalgamations. They cannot receive new assignments from the state level and basic
principles of budget formation remain untouched. In general the position of new
municipalities in intergovernmental vertical may even worsen. Although they formed
the municipality in large area (or local region), i.e. de facto the second level they are
still considered as single small units and they are not eligible of many benefits that is
available for local regional units. As soon as they become more capable the general
(block) grants from central government for them reduces.
So, voluntary amalgamations cannot achieve outputs and outcomes that make major
rational of amalgamations as complex and time and resource consuming enterprise.
I.e. costs and risks of amalgamations may rather often be higher that possible benefits
in case of very successful merger profess. For this reason potential participants of
amalgamations are very careful in initiating the mergers. This makes the
amalgamations for central government to large extent like facade reforms which
function is to justify their inactions in initiating profound local government reforms.
In sum
We evidence that voluntary amalgamations are a very complicated process with many
variables that influence and restrain the outcomes of that enterprise. The most
important restraining variables are, firstly, the lack of general framework for changes
with clear conception and guarantees for new and qualitatively different municipal
units. This reduces the effect of outcomes even in case those effects are actually
prepared and they may in other conditions to give effects. The second, this
amalgamations are to large extent the zero sum game that may develop even into
negative sum game, with all possible suboptimal outcomes that are deriving form
such games. It is therefore even surprising how important outputs and outcomes those
amalgamations have achieved. I.e. amalgamations may produce rather important
changes and in case on favourable factors -- like reflectivity, systemic character of
changes, active mediation of negotiations – those outcomes may be impressive. Thus
voluntary amalgamations that is based actually on the theory in use of traditional
autonomy can not meet challenges that changes in institutional contexts have
produced for local authorities, i.e. when only responses towards the multilevel
governance are feasible.
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