Grass-roots democracy comes with a price in Minnesota, as more than 2,700 local governments spend about $11.5 billion annually for services. Most of that money comes from taxes.

Merging more cities, counties and townships could prevent duplicated spending, according to a report by the Office of the Legislative Auditor.

"We feel there's an obligation for local officials to do that. If they don't, they're doing a disservice to their residents," said project leader Valerie Bombach.

The 103-page report recommends a brisker statewide effort to cut waste, particularly in smaller local governments that might benefit from sharing emergency services, road equipment and even buildings. As state aid to local governments diminishes and more of the cost is transferred to property taxpayers, residents should consider consolidating or even dissolving local governments, the report said.

"The wise ones are casting around for partners," said Jeff Spartz, a former Hennepin County commissioner and now executive director of the Association of Minnesota Counties. "Whether or not we like it, it's going to be a necessary step as we continue to fight those budget deficits. I think people at the local level should talk about what alternatives there are to the current models."

During the recent recession, many local governments in Minnesota cut services to avoid tax increases, even as populations grew. Many joined in partnerships with neighboring cities and counties to cut costs and avoid duplications.

One of those successful mergers came when the south metro cities of Elko and New Market consolidated, Bombach said. Other local governments in Minnesota have merged, or have discussed doing so, but the auditor's report stops short of a full endorsement of consolidation because of the complexities involved, she said.

"Sometimes there was a lack of interest or a refusal by local officials to pursue consolidation," Bombach said. Even when local governments want to merge, doing so can be cumbersome and controversial because of differences in how services are delivered or in what residents expect, the report concluded.

In some mergers, costs could rise unexpectedly when residents in a poorer local government try to balance services with a richer county, Bombach said.

"There will be winners and losers in a potential transaction," Spartz said.

Local governments in recent years have moved more aggressively to sharing services with neighboring cities, counties and townships. Mutual aid agreements for emergency services and joint operating agreements for taxpayer-funded programs have become more common.

The auditor's report encourages the Legislature to fund a pilot project to study two counties interested in consolidating. The Legislature also should offer grants to cities and townships to evaluate proposals, the report said.

Interest in consolidation will grow as long as state budget deficits continue and local governments absorb the costs of state programs, Bombach said.

"The fiscal constraints and budget pressures are clearly something that's driving the interest," she said.

The full report is available at

Kevin Giles • 651-925-5037 Twitter: @stribgiles