We always hear that annexation is good for the city because it’s “capturing” the growth just outside municipal borders. But there’s another hypothesis out there as to why municipal employees might be so gung-ho for more annexation — higher wages.
In an article originally published in 1987 for the journal “Public Choice,” Rodolfo A. Gonzalez (Department of Economics, University of California, Davis) and Stephen L. Mehay (Department of Administrative Science, Naval Postgraduate School, Monterey) concluded the following (emphasis mine):
We hypothesized that extending municipal boundaries will have a positive effect on discretionary outlays and on expenditures per capita. The evidence presented supports these hypotheses. Furthermore, municipal wages appear to be significantly increased in cities experiencing annexation growth. Therefore, we would expect to find that municipal employees are more inclined to favor annexation than the rest of the electorate. From a policy standpoint, this study suggests that significant perverse effects on fiscal efficiency may follow adoption of legal reforms that facilitate the ability of municipalities to extend their borders, or that restrict the formation of new municipalities.
The name of the article is “Municipal annexation and local monopoly power,” and if I had $30 to spare, I’d download and read the whole thing just so I could see how they came to such conclusions. But I found the abstract alone to be thought-provoking. One wonders whether there truly is a correlation here, or if these findings are simply raw cynicism.
Quick, check out job listings for high growth communities that are annexing like crazy. Ok. Now check out job listings for slow-growth communities that may be annexing a little. Next, check out now-growth or shrinking cities.
The difference? Supply & Demand
High Growth area like Arizona/Nevada are exceptionally short of qualified employees. The price per employee goes up. There is a ton to administration that needs to occur to process annexations, and permits. In slow growth areas, there is less pressure, so in turn, less need to pay well to attract and retain.
Without reading the survey, high growth areas tend to cost more as well. Cost of living adjustments.
I think it would be safe to say that private individuals make more in communities that annex a ton too.
I’m skeptical regarding Peoria’s recent annexations. Peoria’s population has been stagnant around 110-113K since Caterpillar’s bloodletting 25 years ago. This population is now spread over ever-expanding borders. This puts greater stress on the police and fire departments, and we have more miles of pavement and sewer lines to maintain. This newly annexed land also provides revenues to School District 323, with 150 cut out of the revenue gains from growth.
Just look to the biggest cities in the country, which all grew by annexation. Chicago (being closest) is a big reason why no city should be allowed to grow that big. Think about the corruption and waste that goes on there and is reported about on a daily basis. It is simply too big for anyone person to have a real handle on what is going on.