2018 Fall issue of Horizons

perhaps as much as “an average response- time improvement of one to two minutes for those living in the jurisdictions that South Metro [will] take over.” The larger districts receive higher ratings from the Insurance Officers Association, which will “save homeowners…roughly $100 a year on their homeowner’s policies for every $300,000 in home value,” according to South Metro estimates. Finally, tax rates for residents are expected to decrease slightly for residents of most of the absorbed districts. While mergers and acquisitions are often thought of as a feature of the for-profit business world, governmental entities frequently engage in such transactions. By combining, governments hope to eliminate duplicative overhead costs and achieve economies of scale. This should in turn reduce the cost to taxpayers. Mergers and acquisitions are also used as means of providing improved services to the public, either by improving the quality of existing services or by acquiring entities that offer services not previously provided by the government. Governmental combinations have become so common that in January 2013 the Governmental Accounting Standards Board (GASB) issued Statement No. 69, Government Combinations and Disposals of Government Operations , which was effective for financial reporting periods beginning after December 15, 2013, setting the accounting guidance to be followed by governments that engage in these transactions. Prior to the issuance of Statement No. 69, governments attempted to account for mergers and acquisitions by analyzing private sector accounting guidance on the topic of their transactions. The GASB recognized that this was often difficult given the unique aspects of governmental accounting and thus released a standard specifically tailored to government consolidations.

GASB Statement No. 69 is useful not only for the accounting guidance it provides, but also for the classification scheme it sets forth for the different types of government combinations. Statement No. 69 defines three different types of government combinations: mergers, acquisitions and transfers of operations. Mergers Statement No. 69 defines a merger as a combination of legally separate entities in which no significant consideration is exchanged. This may be accomplished by two or more governments dissolving to form a new entity. Alternatively, one or more governments may cease to exist with operations being absorbed into a continuing governmental entity. The fire district consolidations in the Denver area previously described meet this definition of a merger. Additionally, over the past several decades, many cities and counties around the United States have merged to form a consolidated city-county government. These entities seek to achieve efficiencies and economies of scale by bringing the powers and responsibilities of a city (which is a municipal corporation) and a county (which is an administrative division of a state) under the same governance. Examples of major U.S. metropolitan areas with some form of consolidated city-county government are:

∙ City and County of San Francisco, CA

∙ City and County of Denver, CO

∙ City and County of Honolulu, HI

∙ Indianapolis and Marion County, IN

∙ Nashville and Davidson County, TN

∙ Jacksonville and Duval County, FL

∙ City of New Orleans and Orleans Parish, LA

∙ Kansas City and Wyandotte County, KS

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