Saturday, February 11, 2012

Municipal Government

Lapland Landscape with Power Line
Lapland Landscape with Power Line, Muonio, 2010

Last week, the Finnish government dropped a bit of a bomb. They presented their plan for reforming municipal government in Finland. That would entail cutting down the number of municipalities from around 350 to around 70. That's a pretty huge change, and it will certainly not happen exactly as they're planning. Municipalities are tied to local identity, which makes such a reform explosive to start with; what's more, there are going to be losers as well as winners, and the losers are going to fight against it tooth and nail.

It got me thinking about municipal government. It doesn't get the press of international or national government, which is a shame because it has more impact on people's everyday life—and individual people have much more power to affect it, too. I discovered that I'm actually woefully uninformed about how municipal government even works in Finland. Yet this is important enough that I think I ought to have some opinion about it.

Municipal government is the foundation of any working democracy. In Finland, most everyday government business is run at the municipal level. Municipalities are responsible for most roads and infrastructure, for healthcare and social services, and for education. All this is paid for by municipal taxes, which are levied on income and on property. This stuff matters, arguably more than which party is is sitting at the head of the table in the Parliament House.

Our municipalities are a bit of a mess. They are what they are for historical reasons. They're of wildly different sizes, in terms of population, surface area, and wealth. They also often jealously guard their independence, and get along poorly with neighboring municipalities. This has led to oddities like the municipality of Kauniainen, which is an 8600-strong enclave inside Espoo, the Western neighbor of Helsinki. Kauniainen will be violently opposed to the municipal reform, because its population consists of relatively well-off people, which means that they pay two and a half percentage points lower taxes than the residents of nearby Vantaa, while getting a good deal better services than them.

Too small municipalities lead to feedback cycles which see wealthier people migrating to richer municipalities and poorer people left in poorer ones. Because the cost of the services the municipalities need to provide doesn't change all that much, that means that the richer ones will be able to lower their tax rates even as they improve the services, whereas the poorer ones will get caught in a cycle of deficit spending, tax hikes, and deteriorating services, which naturally further drives the gentrification/ghettoization process.

Not good.

To patch up this problem, we have the Byzantine system of "state portions"—a misnomer, really, because it's actually state-mandated redistribution of tax receipts from richer municipalities to poorer ones. It's Byzantine because the criteria that determine who pays and who receives are very complicated, and they result in bizarre and frankly unjust situations where the relatively middle-of-the-pack Vantaa pays about 70 M€ a year, whereas the regional capital of Tampere receives twice that.

The upshot is that everybody agrees that the system stinks and should be reformed: the poor municipalities because they're getting the sticky end of ghettoization, and the rich ones because they're having their tax receipts siphoned off and inefficiently redistributed. The trouble is that nobody can agree about exactly how it should be reformed. Everybody's in favor of merging other municipalities, voluntarily of course, but our municipality doesn't need any merging, thank you very much.

To make it even more complicated, there are the politics of language. Finland has a Swedish-speaking minority of about 4%. It has certain special privileges defined by law. The Swedish-speakers are concentrated along the Southern and Western coasts and in the archipelago, in mostly bilingual municipalities, most of them majority Finnish-speaking. The Swedish-speakers will oppose any changes to the municipal system that would dilute the proportion of Swedish-speakers in a municipality. Kauniainen, for example, is nearly 40% Swedish-speaking. Many of them would consider it a cultural death sentence to be absorbed into a Greater Helsinki, with maybe 6% Swedish-speakers. I sympathize; they're a relatively small minority, and without constant effort to maintain their language, identity, and culture, they would get absorbed into the Finnish-speaking majority pretty quickly, which would be a real loss.

But it does make things more complicated.

Yet another complication is the long-standing Finnish policy of providing—or aspiring to provide—the same level of services everywhere in the country. This is a great deal more expensive (per capita) in the sparsely-populated East and North of the country. This ties in with the greater goal of keeping the entire country populated, which is bound to the question of agricultural subsidies. All of this will hit us splat in the face when considering municipal reform.

Personally—and this is probably no surprise, coming from a reddish-green city liberal—I think we need to rethink these goals. The Finnish population is aging and declining, and there aren't all that many jobs in agriculture anyway. If someone wants to raise dairy cattle north of the Arctic Circle, I have nothing against it—but I don't think it's right that they expect someone to pay for the electricity to heat the stables, or the fuel to transport feed and milk across long distances, or the extra feed they need because they're too far north to grow enough of their own. If we could manage a gradual migration of people from the widely dispersed countryside to regional centers and let the wildernesses go back to the wild, I would not think that a bad thing—as long as we did everything possible to take care of the people being displaced. Property values would fall to zero due to a change in politics, and it would not be fair if the people affected were left high and dry. And if someone wanted to live in the emptied countryside despite the relative lack of infrastructure and services, I would have nothing against that either.

Finnish politics have gotten interesting again, and with this municipal reform, they're going to get more interesting still. We're embarking on a major experiment at social engineering. Stay tuned, there will be lessons for everybody. I hope they won't be too disheartening.

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