Last year, New Jersey Gov. Phil Murphy appointed two former mayors to encourage more of the state’s 565 municipal and 21 county governments to collaborate. It appears to be working.
This year, local governments across New Jersey are considering more than 770 shared-services agreements, which state officials hope will lead to some cost savings — and even translate into lower property taxes for residents.
That’s almost double the average number of agreements submitted to the state in the years between 2014 and 2018, according to the New Jersey Department of Community Affairs.
The agreements have sprouted over the last year and a half, since Murphy appointed the “shared-services czars” — one a Republican, one a Democrat — to get more local governments to work together and to chip away at property taxes. New Jersey has the highest average property tax in the country. The idea is to lower expenses and the need for more revenue.
State officials anticipate more collaboration to come. Last week, New Jersey opened applications for local governments to apply for some of the $10 million allocated in the state budget to support shared services through the Local Efficiency Achievement Program. Local officials can get grants to identify opportunities for collaboration, study whether shared services agreements make sense, and implement plans if they do.
Several public works departments are working on mergers, which “seems like a ripe area for towns to work together on,” said Jordan Glatt, a former mayor of Summit, Union County, and one of the shared-services czars.
Local governments also are considering collaborations in areas such as information technology, municipal courts, tax assessors, equipment, and health departments. Those don’t seem to garner much opposition, said Nicolas Platt, former mayor of Harding Township, Morris County, and Glatt’s partner. Glatt and Platt hope these simpler collaborations pave the way for more difficult conversations.
"Without the big three — police, fire, and schools — we’re just scratching the surface,” Platt said. To make a big difference in residents’ “crippling” property taxes, he said, “we have to start tackling those.”
When local officials, unions, or others push back against sharing services, Glatt and Platt tell them that if local governments don’t act, they’re going to get hurt worse in the long term. “Let’s do it in a controlled manner rather than in an abrupt one when there’s no money,” Glatt said.
Platt and Glatt received a new bit of validation this month in the form of a Moody’s Investors Service report that studied some of New Jersey’s shared services agreements. The report called the setup an “effective tool” to “control spending and save money while maintaining service levels,” especially “in an environment of rising costs and a declining appetite for raising taxes.”
Moody’s researchers saw cost savings, operational efficiencies, or both as a result of agreements they studied. A properly executed shared services agreement can help municipalities’ credit ratings, they said.
“You hear about shared services and what they try to do,” said Susanne Siebel, associate lead analyst at Moody’s. “When you try to quantify it, it’s interesting to hear on a percentage basis, how much it can really help.”
Gloucester County, for example, partnered with neighboring counties to share correctional facilities starting in 2013 and estimated savings have grown each year, according to the Moody’s report. The county saved about $21 million in fiscal year 2018. The county has used savings partly to expand offerings at the community college.