Indicators of Financial Condition in Pre- and Post-Merger Louisville

Abstract

Proponents of metropolitan consolidation identify a range of benefits that may be realized through merger, including improved financial health. There is little agreement as to the actual outcomes across localities that have consolidated, even when limiting the scope to the four major urban mergers, including the merger of Louisville, Kentucky with Jefferson County in 2003, which is under consideration here. One likely reason for conflicting results is the limitation of reflexive analysis as a means of assessing financial impact. In the private sector, analysts would use financial ratio analysis to determine whether the new merged entity was financially healthier after merger. Though a political merger differs from a private sector merger, financial ratio analysis can still be used for pre-and post-analysis of merger effects on financial health. Further, when enough time has passed since merger, quasi-experimental designs like interrupted time series can test the hypothesis that merger had no significant financial impact on the entity at all.

Merging during A Time of Fiscal Crisis: A Financial Condition Analysis of the Augusta-Richmond City-County Consolidation

“…A study by Swanson (2000) of consolidation in Jacksonville, Florida, found no increases in efficiency afterward, nor did a study by Savitch, Vogel and Ye (2010) of Louisville and Jefferson County, Kentucky. Kelly and Adhikari (2012), however, using a quasi-experimental design in the paper discussed earlier, reported to the contrary that consolidation did improve Louisville's financial condition. In these cases, consolidation was framed mostly as a means to strengthen the community's economic development efforts.…”

“…In this paper, we examine the effectiveness of consolidation in improving the fiscal health of local governments using a case study analysis, examining pre-and post-measures of fiscal health in Augusta, Georgia, in the period from 1990-2002. These measures were based on work by Rivenbark, Roenigk, and Allison (2010), Smith and Afonso (2016), and Kelly and Adhikari (2012. The findings from this study are of interest to public administrators regarding the effectiveness of city-county consolidation as a fiscal tool.…”

“…In fact, few studies have investigated changes in the fiscal health of governments by comparing pre-merger and post-merger governmental units. One such study, by Kelly and Adhikari (2012), examined these data for the consolidation of Louisville and Jefferson County, Kentucky, but neither government had been experiencing a financial crisis at the time of the merger; and while gains were made in terms of financial health following this merger, many of the promises of efficiency did not materialize (Savitch, 2011;Savitch, Vogel, & Ye, 2012). Otherwise, little systematic analysis of the impact of consolidation on the financial health of public organizations has been published.…”

“…The present research effort was designed to help fill this gap by focusing specifically on the impact of consolidation on the financial health of a government in fiscal crisis. Using Augusta-Richmond County, Georgia, as a case study, we performed a pre-and post-merger financial condition analysis similar to the one performed by Kelly and Adhikari (2012). To be more specific, we built on these authors' work by replicating their design in order to study the effectiveness of consolidation in improving local financial health when one of the merged governments was experiencing a fiscal crisis.…”

Exchange patterns and relations in collaborative governance.

“…Brierly, 2004;Carr & Feiock, 1999;Feiock et al, 2006;Kelly & Adhikari, 2013;Rosentraub, 2000;Savitch et al, 2009) One reason for this lack of success is that consolidation as a form of territorial rescaling removes all jurisdictional autonomy, a condition most independent cities reject. Additionally, having a unified government has been linked to principal-agent and internal coordination problems (Chubb, 1985;Nicholson-Crotty, 2004).…”