A recent headcount of local governments in the United States--89,004, down only slightly from 2007--recalled to mind a conversation I had with a state legislative leader about the continuing budget pressures on local governments and the reluctance of most local officials to consider consolidations of jurisdictions or services. His theory was that "we should put all the patrol cars in a multi-town pool, and have them slap different town seals on as they cross boundaries. Heck, at this point we could probably do it with GPS automatically. We could get the economies of scale and preserve a sense of identity."

He was joking, but the comment underscored what he thought was the initial barrier to significant structural change in the delivery of services. Certainly, as many experts have observed, there are many impediments: Savings and efficiencies are not automatic and must be earned through rigorous execution, bargaining-unit agreements can limit early achievement of top efficiency, and so on. Babak Armajani systematically examined these complexities, and alternative approaches to achieve in savings and productivity, in a recent Management Insights column.

But I've spoken to few observers who don't attribute to the identity issue--the sense of what it means to be an independent jurisdiction--the common failure to even get to the starting line of considering significant service-delivery changes.

It's not all that different in the nonprofit sector, which is struggling as much or more than state and local governments. The past four years of public funding and philanthropic retrenchment have left myriad small, mission-driven organizations of all stripes (social service, cultural, environmental) in dire, even existential crisis. These are organizations so mission-driven that they will stay open so long as they can turn on the lights, yet they often resist opportunities to find economies of scale that would put them on more stable footing. For every one that forges a partnership or outsources functions to stay in business, there are many others that insist that if they are not totally, fully independent, they are simply not real.

"We call it the Velveteen Rabbit Syndrome," says Thaddeus Squire, a nonprofit entrepreneur based in Philadelphia who works with small cultural organizations and has launched a service organization to provide a range of services at lower cost and higher quality. "'I'm not 'real' if I don't have my own executive director, copier, printer, space, board, staff and so on.'"

Having missed this classic children's book despite raising two daughters, I needed help with the Rabbit. Squire explained that this poetic and perhaps elegiac tale is about the exploration of what makes one "real." And this seems to be where local officials get hung up. If it's not "our" police force, are we not a town? If the county plows the roads on contract, are we less a town? If the adjoining town runs 911 dispatch, is the service that's provided less "ours"?

To get an idea of how that identity issue might be addressed, it's worth taking a look at the delicate balance achieved in King County, Wash., where 12 cities, two local transit agencies, a regional airport and a tribal authority are among those that have contracted with the county sheriff's office to provide police protection.

The contracting jurisdictions collectively are saving millions of dollars through economies of scale. Moreover, as new areas come under the arrangement (the sheriff just added the unincorporated areas of King County to the contract services), the overhead charges to participating jurisdictions are spread over a wider base with more savings.

And the Velveteen Rabbit Syndrome? It seems to have been solved in King County. While all of the police personnel are county employees, each jurisdiction selects its own police chief, wears its distinctive uniform and displays its town seal on its vehicles. "You would never know the difference," says the sheriff's chief of staff, M. Scott Sotebeer.