The Daily News of Los Angeles
July 31, 2002 Wednesday, Valley Edition


BYLINE: Shirley Svorny, Local View

MANY voters are concerned that should the San Fernando Valley detach from Los Angeles, taxes would increase on both sides of the Santa Monica Mountains. Those opposed to secession, including Los Angeles Mayor James Hahn, threaten an increase in taxes to scare people from the otherwise intuitively appealing idea of having smaller local government.

It would be a shame if this misinformation were to affect the outcome of the November election. If anything, the breakup would do away with some of the inefficiencies that hinder Los Angeles, lowering per capita costs and reducing redundant bureaucracy.

Although the idea of secession is new to Los Angeles, the efficiency effects of municipal government size have been the subject of academic research for decades.

According to Syracuse University economist John Yinger, author of several studies examining the production of municipal services, "there is no evidence of economies of scale ... at very large city sizes. It makes no sense to oppose these two separations because of economies of scale."

For fire and police services, which comprise the lion's share of city spending in Los Angeles, Yinger and others have found no evidence that large cities are more efficient, and some evidence to suggest that they are less efficient. This means that per capita costs of providing services can be expected to stay the same or drop if the city is divided into smaller municipal governments.

Ruling out an increase in costs, Yinger, who lives in New York, speculated that there must be some other reason behind opposition to secession. He wrote, "This leads me to suspect that there is an equity/efficiency trade-off here, as there is in so many cases. Separation probably will increase efficiency, but probably also will hurt equity."

Yinger is right. Los Angeles, without the Valley, and after the alimony payments are exhausted, will have to cut its spending. The annual loss to Los Angeles has been estimated by the Los Angeles County Local Agency Formation Commission to be approximately $128 million; Los Angeles will have to cut its spending by 3 percent to 4 percent.

Opponents of secession have argued that the loss of funds will hurt poor residents in Los Angeles. However, I have yet to see evidence that tax revenues from the Valley ever make their way past the city bureaucracy to enhance conditions in poor neighborhoods - in or outside the Valley. Most inner-city funds come from the federal government. Los Angeles has all but ignored the needs of its poor neighborhoods.

The "equity" effects associated with this detachment are not associated with transfers to the poor, but instead, transfers from Valley residents to the City Hall bureaucracy.

Costs of services per resident in Los Angeles are significantly higher than in other cities and the city bureaucracy is known to be inefficient and ineffectual. Even Mayor Hahn, secession's most vehement opponent, has said time and time again that the city hasn't been doing a very good job of meeting residents' needs, despite the billions of dollars spent annually by city government.

If the city wastes or misdirects hundreds of millions of dollars a year due to lack of citizen oversight, and if secession limits this behavior, residents all over Los Angeles stand to benefit.

The concerns expressed by residents, concerns about higher taxes and increased bureaucracy should the Valley and Hollywood detach are not consistent with what is known about municipal government. We are more likely to see an increase in government efficiency than a decrease as the city downsizes. Hopefully, voters will not be misled by claims to the contrary.

EDITOR-NOTE: Shirley Svorny is a professor of economics at California State University, Northridge.