A bill making it easier for New Jersey’s municipalities to merge by identifying funding sources that can be used for consolidation expenses was recently passed by the NJ Senate and introduced in the Assembly last week. Various efforts have been made by the Legislature over the years to encourage municipal consolidation, including the Municipal Consolidation Act of 1978, the Sparsely Populated Municipal Consolidation Act of 1995, and the Local Option Municipal Consolidation Act of 2007. Each of these laws has created new incentives or more flexibility to encourage municipal consolidation.

Since reaching a peak of 568 municipalities in 1957, however, only two sets of municipalities have merged, with the recent Princeton Township/Princeton Borough merger to take effect on January 1, 2013, bringing the total number of mergers to three, and reducing the number of municipalities to 565.

While a small step, anything the Legislature or citizens can do to encourage consolidation is a good thing.

Alan Karchar comprehensively documented the facts about New Jersey’s out-of-control municipal government in 1998 in his book, New Jersey’s Multiple Municipal Madness. New Jersey has a land mass of 7,354 square miles consisting of 242 Townships, 254 Boroughs, 52 cities, 15 towns, and three villages. Almost a third of these 566 municipalities, or 177, are less than 2 square miles; 323, or 57%, of NJ’s municipalities have fewer than 10,000 residents.

New Jersey has more municipalities per capita than any other state. And yet, seen from another perspective, New Jersey is just a more extreme example within a broader regional pattern. Mark Muro, senior fellow and director of policy for the Metropolitan Policy Program at the Brookings Institution, describes the megaregion encompassing Maine across through New England and down to New Jersey and Pennsylvania as the “Little Box Belt”: “relatively old states with relatively large numbers of small municipalities with often stagnant or dwindling populations — that essentially are supporting a huge overhead, many more units of government than other regions.”

Some of these states have figured out through legislative and policy changes how to make their states more flexible and “nimble” so that they are in a better position to respond to economic opportunity. Maine, for example, passed a law in 2007 that reduced its number of school districts from 290 to 179, and seeks to further reduce that number to 80. Other states, particularly those in the south and southwest, rely more upon a county system of government, which streamlines decision-making, creates greater efficiencies, and makes it possible to jump more quickly on emerging economic development opportunities.

But New Jersey maintains an abundance of very small municipalities with the power to tax, sue and be sued, obtain and dispose of property, enter into contracts, and adopt local ordinances. Significantly from a development and economic growth perspective, all these municipalities have the power to plan and zone the land within their borders.

The challenges associated with this inefficient structure of government have been well documented. New Jersey has the highest property tax rates in the nation. Multiple municipalities mean multiple paychecks and potentially redundant positions to support.

From an economic growth and community quality of life perspective, New Jersey’s practice of “home rule” has taken its toll. New companies are deterred from coming to New Jersey — and existing companies are deterred from expanding — by our extremely localized, lengthy, and bureaucratic land use and political approval processes. This lack of predictability, lengthy decision-making timeframe, regulatory complexity, and disproportionate local control over potentially significant regional economic growth projects deter businesses that would otherwise create jobs here from even considering this area. It makes it difficult for those companies and institutions that have their home here to consider expanding.

Housing and mixed-use development proposals that could help create a sense of community and promote public transit usage also suffer. Whether a proposal gets a thumbs up or a thumbs down has less to do with the quality of the project or the need for it in the region than it does with the project’s effect on the municipal budget and whether school-aged children will come into town, thus presumably increasing local property taxes.

A regional system of governance and reduced (or eliminated) reliance on the local property tax to fund public education could dramatically improve our economic growth trajectory, development and transportation patterns, property tax burden, and community quality of life.

New Jersey does have regional authorities that can serve as models as we look to streamline government and do a better job of planning for economic growth and strong communities. The NJ Meadowlands Commission, for instance, is one of the nation’s early models of regional tax base sharing. While it has recently come under some local attack, the NJ Meadowlands Commission has served as the zoning and planning agency and has effectively pooled and reallocated taxes from its 14 constituent municipalities in Bergen and Hudson Counties since 1969.

Another example is the regional Metropolitan Planning Organizations (MPOs), which were formed nationwide to oversee federal transportation improvement projects. NJ’s MPOs include the North Jersey Transportation Planning Authority (NJTPA), the Delaware Valley Regional Planning Commission (DVRPC), and the South Jersey Transportation Planning Organization (SJTPO). These MPOs could, if given the authority, take on broader planning and zoning functions.

New Jersey also has a county system of government representing our 21 counties. NJ’s counties are generally a weak form of government, with limited governmental powers, particularly with regard to taxation and land use planning authority. But the capacity of NJ’s county governments could be substantially expanded through changes to the NJ County Planning Act and through adequate funding of county government functions.

And our system of funding public education through heavy reliance on the local property tax could also be changed. New Jersey ranks among the top five states in the nation in our reliance on local property taxes to fund public education. One alternative that would provide local property tax relief, save money, and support better community planning is a statewide or county education tax to replace that portion of public education that is funded through the local property tax.

These are not small changes. They involve changes to our systems of government, our system of funding public education, and our way of planning and developing our communities. But the status quo is becoming harder and harder to accept. High property taxes, sprawling communities, and economic stagnation are not our only alternatives. Nor should they be inevitable outcomes.