Wednesday, April 17th, 2019

ZRFM Releases 2019 Edition of Handbook for Newly Elected Officials

ZRFM is proud to announce the publication of the 2019 Edition of “Handbook for Newly Elected Officials: A Practical Guide to Local Government” written by Richard G. Flood and Ruth Alderman Schlossberg of the firm and published by the Illinois Municipal League. This is the fourth edition of the book. This spring and summer, our newsletter will publish occasional excerpts from the book on topics that may be of interest both to newly elected officials and to long-standing readers. If you have any comments or questions about these excerpts or want to receive a copy of the handbook, please email rschlossberg@zrfmlaw.com.

Here is an excerpt from Chapter 2 of the book about “Where You Fit in the Big Picture: Law and Theory.” This is excerpted from a longer discussion of why it is a mistake to think that local governments can or should always “operate like a business” and some of the challenges that are unique to government operations:

Government is Intended to Meet Objectives That Cannot be Measured by Profit

The third major difference between local government and business is that most, if not all, businesses have profit as a primary motive. The usual purpose of a business is to make money for the owners, to provide gainful employment for the employees and to pay dividends or increase value for any stockholders. With such clear and primary goals, decisions can more easily be debated and determined, and outcomes measured.

By contrast, the function of a municipality is not to make money. Municipalities offer services, not profits. Services performed by the municipality and supported by tax dollars are intended to assist municipal residents in ways that the private sector cannot do in the absence of a profit motive. While governments strive to provide such services at a reasonable price, very few government programs are meant to make a profit. For instance, the purpose of issuing traffic or parking tickets is not to produce a profit. Rather, it is intended to make the residents safer. Parks are offered to enhance community welfare. Sewer, water and building codes are imposed to enhance public health and safety. In addition, because of the many regulations imposed on local governments often in the interests of the public’s safety or welfare, it can be very difficult for governments to control or cut their costs as readily as the public might expect. Accordingly, when an elected official considers a proposal, the decision making process can be complex and multifaceted, and outcomes cannot be measured in profitability or increased value. The concerns of and the benefits to residents must be weighed along with cost and other factors to arrive at a responsible decision.

Not only must government meet objectives that differ from the relatively clear mandate of making a profit, but government also delivers services that most of its customers must accept whether they want those services or not. Citizens must live with the decisions of the elected officials regarding the choices they make about such things as streets, water and sewer services, ordinances and law enforcement even if they believe the wrong decisions have been made. In the private sector, the citizen has the choice to simply not purchase a product, but the citizen has no such choice regarding most public services. Citizens can vote in the next election, but in the meantime, they cannot easily choose not to use a public road or to simply ignore ordinances with which they disagree. Because it is neither necessarily appropriate nor possible to please everyone all the time, the result is that some of your “customers” will be unhappy regardless of what choices you make, but short of moving, they cannot simply take their government needs elsewhere.

Governmental “Success” is Difficult to Quantify

A fourth major difference between local government and business is the difference between residents and customers. In business, the way to maximize profits is to satisfy customers. You sell the best product at the lowest price. By contrast, municipalities have a much more complex relationship with their residents. Residents are not normally billed for each service they receive. Rather they pay for services through their taxes, which for many municipalities are primarily real estate taxes.

Accordingly, residents often do not necessarily relate their demands for the best service to the cost of these services through their taxes. Because they are not buying one service at a time, it is difficult for a resident to weigh whether they are paying too high a “price” through taxes for the “service” or “product” (e.g., police protection, streets, etc.) they are receiving. The result is that a resident sees no contradiction in asking for better police services while simultaneously demanding lower taxes.

Additionally, local governments do not have owners as traditionally understood in the business world. While taxpayers theoretically own their local government, it is an ownership that cannot be valued or sold, nor does it show a profit. The result is that the taxpayer does not treat his or her ownership in the traditional sense. Often, the taxpayer does not feel like an owner or a part of the local government. The taxpayer views the local government as belonging to and operated by others. He may own it, but he does not control it. And, unlike business, local government does not need to market its services. Although in a more general sense, governments do market themselves to have residents choose to live there and do business, most of the services provided by local government (police protection, sewer and water) are provided to all regardless of whether individual residents want the service. Most services are mandatory, as are the taxes imposed to support them.

When weighing a decision, learn to ask questions that are not traditional in the business world. Instead of asking if a proposal will make a profit, learn other criteria for weighing a proposal. How many residents are affected? How many will it help? How well can we provide the service? What will it cost? Can we provide it for less, and if so, how? Will it adversely impact any residents? How many? How can we design it to benefit the most residents? Can the private sector provide this service better than local government? What if we do not provide the service?


Author: Richard G. Flood, Ruth A. Schlossberg