by Robert J. O'Neill Jr. 
Executive Director, ICMA 

Although many of us in local government feel as if we'll need to fend for ourselves for at least the next decade—if not longer—due to the slow pace of economic recovery, I believe that the next decade will be one of incredible creativity for local government. By now most of us have come to realize that the status quo no longer works, and that innovating and making choices that were previously politically unthinkable are the only ways to maintain a balance between our fiscal challenges and our responsiveness to residents' demand for services.

Some interesting patterns and elements of success have emerged as a result of the current crisis:

More effective and efficient local government. We now have gone through three to four years of local governments adjusting to the economic downturn, which resulted in a nearly $225 billion structural deficit, according to IBM's David Edwards. And most likely we face several more years of pain. But because governments are being forced to make countless and difficult financial decisions today, we could emerge within the next 10 years with a reformed vision of local government that will be highly effective, more efficient, and more transparent.

A platform for regional cooperation. Local governments can no longer afford to operate independently. Many services that were previously managed by the states, such as transportation, will need to be handled on a regional basis. Traditional jurisdictional boundaries will no longer apply.

One example is the Business Support Services unit of the city of Charlotte, N.C., which strives for recognition "as the national leader in delivering public sector shared services." To achieve that vision, the unit created an extensive service infrastructure that promotes governmental efficiencies and interoperability. This transformational system provides information technology, procurement, fleet, and public safety communication services not only to the city but also to Mecklenburg County, smaller rural cities and towns, and state and federal agencies throughout the area.

An engaged and enlightened business community. Facilitating job creation requires an engaged and thoughtful local business community. In a number of enterprising jurisdictions, the business community has taken the lead in advocating economic revitalization.

After bottoming out in the 1980s and early 1990s, when the gas and oil industries tanked and six of the city's largest seven banks had to be recapitalized, Oklahoma City officials banded together with the business community to develop a transformational strategic plan for the city's future. They worked together to support sales-tax initiatives and tax-increment financing for projects throughout the city's downtown and surrounding neighborhoods. Today, Oklahoma City boasts $400 million in private investment, an NBA franchise and triple-A baseball and hockey teams, and a downtown entertainment district full of clubs, restaurants, condos, and offices—all connected by a man-made canal with water taxis.

A refocused and rightsized nonprofit sector. The Great Recession caused the poverty rate in the United States to hit a 15-year peak in 2010, and increased demand for nongovernmental services has heightened the need for philanthropic and nonprofit support. Yet, in nearly every community, charitable giving is down and nonprofits struggle to remain afloat.

To address the anticipated nonprofit-sector financial crisis, the Foundation for the Carolinas initiated a Critical Need Response Fund to assist the organizations serving "those hardest hit by the economic crisis." The foundation then joined the Arts & Science Council and United Way of Central Carolinas to form the Community Catalyst Fund collaborative, which fosters a "more effective, efficient, and innovative nonprofit sector" through partnerships, strategic collaborations, and nontraditional models of service delivery. Finally, the fund developed a plan for supporting shared back-office services that would generate significant savings for nonprofits in the Charlotte-Mecklenburg region.

While still in the development phase, this shared-services project has all the earmarks of a successful model for harnessing and refocusing nonprofit-sector energy within a community so that it can continue to provide critical social-safety-net services.

A 21st-century resident-engagement strategy. Ensuring the future success of local government will require us to adopt new technologies, foster more digitally inclusive communities, and marry elements of high tech and high touch in ways that engage and excite our residents.

Through its innovative Open City Hall, the staff of Decatur, Ga., identifies one or more issues on which they need input from residents. Staffers post background information about each topic on the city website and invite residents to submit comments online. The comments are combined with information from other stakeholder participation mechanisms and used by the city to make critical community decisions.

Alachua County, Fla., stimulates creative thinking and builds community by holding an annual series of interactive "Community Conversations," during which residents adopt the role of commissioner and recommend service priorities. Staff members survey participants electronically to gauge their opinions on local issues. The conversations encourage residents to actively collaborate in the creation of the community as they imagine it.

The next 10 years undoubtedly will be challenging for local government. Yet if we continue to make tough choices, explore and exploit nontraditional partnerships, and innovatively rethink the way we do business, we will emerge from the decade with a new, more efficient, and more transparent model of local government. It's a long-term investment, but it is one that we must make.

This content appeared as a Management Insight column in the January 25, 2012,  issue of Governing.com.