Any way to make reporting identity theft easier is a good idea and should be implemented immediately. Identity theft is a huge problem and needs to be combated as fiercely as possible. If there is a way to get this done swiftly through local municipalities, then yes, let's get this done.
Yes, municipalities make it easier to report identity theft, because organizations do not want to investigate. The local agency, where the person is the victim, does not want to investigate because the defendant is far away. The place where the defendant is does not want to investigate, because the victim is not there for prosecution.
I think immediately being able to report identity theft to a local authority easily would be a great benefit, the earlier you can report it the earlier the authorities can try to track down whoever stole it and prevent fraud from happening, so simplifying the process and making it easy to report would be a good thing.
The consequences of identify theft are great enough that reporting the crime should be made as easy as possible. When a person's credit and bank accounts are on the line, it calls into question there future vitality. Laws impeding these investigations need to be done away with so the job can get done.
Since it is not the responsibility of municipalities to resolve cases of identity theft the current reporting methods are adequate. In reality the responsibility for dealing with identity theft falls on the victim since the resolution of the issues are mainly civil ones dealing with debts and liability for those debts.