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The decentralization of government was a key tenant of the American Republic (1789-1860). The idea behind this was simple: If the locus of government was nearby, it would be much easier for citizens to remain engaged in the political system and thus ensure government continued to act on the behalf of the citizens that empowered it. Most importantly, although left unidentified, citizens retained a sense of control over their lives.

This was more than an ideal at the time: In the late 18th century, transportation technology mandated it. Yet, despite our transportation technology in the 21st century, the locus of government should be in our communities. Decentralization of government (not downsizing) remains relevant to our sense of significance, as we retain some local measure of our communities.

There are two implicit understandings behind decentralized government:

  1. America’s founders took citizen engagement for granted. Engagement is easier at the local level, as it’s in our own backyard, so to speak. In addition, the structure of government is smaller and thus easier to identify where to engage.
  2. Local government is no better than national government if citizens are not engaged. Without local and constant engagement, corruption has free license to run rampant. Nothing changes save for the view from the lobbyist’s window.

And yes, there are local lobbyists. Two of the most powerful local lobbying interests are the local commercial and/or residential developers.

And as with all corruption – local, state, national and international – to uncover it, simply follow the money.

In any drive to decentralize government, two ends much be met:

First, economic institutions must also be decentralized, as much as pragmatism allows. A local community, with a giant multinational conglomerate sitting in its backyard, has little chance of effectively regulating such a monstrosity, other than creating enough resistance so that it closes and moves elsewhere. But that simply becomes NIMBY – Not In My Back Yard. Also, the jobs may be needed in the community, making resistance a tough sell if the local economy is otherwise less than vibrant. And no local economy exists in a vacuum; they can become victims of the larger national and international economies, as realities stand today.

Certainly such industries as auto manufacturing will prove difficult to centralize, due to the inherent economies of scale. Other industries, such as the tech sector, are easily decentralized. Still others – healthcare and housing – have always been local in terms of point of service, but these industries have massively centralized, in terms of their ownership and management structure, over recent decades. Simply considering the dysfunctional state of the U.S. healthcare system is all it takes to understand the negative effects of centralizing (and switching to for-profit status).

Secondly, and probably the single most critical end in any drive for decentralizing government, we will need an army of accountants who understand public financial spreadsheets. This is where we can follow the money, and complete cooperation and transparency will be required from the local government.

But there are pitfalls.

How do we source this army of accountants? Should we simply count on altruism and the civic spirit of accountants? Not with our present zeitgeist.

Should they be hired by city hall? Hardly. Accountants will not bite the hand that feeds them.

Should they reside at city hall? See the last statement.

And what accountant can we trust? Those possessing an understanding of public finance either work for the local government or, if employed by a private firm, certainly rub elbows with local officials at the country club, chamber of commerce or fund raiser.

My proposal is to establish a local financial oversight office, wherein the office, accountants and operations are funded through tax revenues external to the city’s budget, yet being extracted from the same annual tax revenues that flow to city hall, but with $x dollars set aside for the operation of the office.

In one sense, this external funding move shouldn’t be necessary, as everyone at city hall is supposed to be working on behalf of local residents. But this requires a change in the thinking of city employees, both elected and administrative. Rare indeed is the city official or employee who frames their paychecks in such a fashion. So, to help the accountants remember who they work for, an external funding channel will have to be established.

The local financial oversight office has a singular mission to fulfill: to act as a financial watchdog over all expenditures and financial activities of city hall (or a county or parish commission). This includes not only the budgeting and management of tax revenues, but also any local fundraising efforts such as municipal bond issues.

At a minimum, the local financial oversight office should release quarterly reports, and one annual report. Every effort must be made to explain the spreadsheets in the reports, so that a reasonably educated resident can follow the financial activities of the local government(s).

The local government should hold an open-door meeting immediately following the release of the annual report, to take questions from residents. This meeting would preferably be held in the spring, after the high school football and basketball seasons (God knows we wouldn’t want to interfere with those sacrosanct activities), after the nastiest part of winter weather has passed (for northern climes), but before vacation season arrives.

It may even be a good idea if the local financial oversight office holds its own public meeting after the release of the annual report, but before the local government meeting. It not only would be optimal to field questions from local residents in preparation for the local government meeting, but also provides the office with a chance to report on its own activities.

Preferably, the accountant(s) hired at the local financial oversight office should be sourced from outside the community, with minimum/maximum terms served contractually. No previous history of local involvement should be uncovered in the hiring process. Ideally, this helps the accountant(s) remain above the local political fray, and above agency capture.

Nothing, of course, will remain perfect unless civic engagement continues to be pursued by all citizens. But a local financial oversight board would go a long way in delivering on the promises of decentralized government.

Be sure to catch the comments below, wherein Bob from The Secular Jurist and I debate decentralization. I consider Bob a friend, and he has certainly kept me honest. Without his  comments, much of this post would have remained under-defined, certainly creating no small sense of confusion, and for that I thank him.