At a very high level, yes I do believe that borders should be continuously redrawn based on population movement. But it doesn't need to happen in a fully central planning sort of way, it could be more fluid.
For example, towns on borders could elect which side of the border they are on. And neighborhoods could elect which town they are in.
If borders were more fluid, I think you'd see things like stronger divisions between urban and rural areas, which is a good thing. Illinois is an urban state by population with a massive rural subset. It doesn't make sense to me that two populations with such vastly different needs would be under the same state laws.
I like this idea, but I'd also like to point out that in some (many) cases, the outcome may be the opposite of that envisioned. For example, a large part of Southern Connecticut is mainly a bedroom community for New York City; based on the typical commute, you'd think it should join the state of New York, but I can guarantee you people in Southern Connecticut are perfectly happy paying less in state taxes. Conversely, if they could choose to secede from the New York State, Westchester County would join Connecticut in a second, although again, it's a bedroom community for NYC.
Fluid borders provides better competition between jurisdictions. A community would have no reason to join a higher taxrate jurisdiction unless they were getting value out of it (e.g. better schools, trains, police, etc.). That's a good thing.
Though I fully acknowledge that I'm ignoring significant issues. e.g. what if NYC drops billions on a new trainline, and then some neighborhoods benefiting from the train line switch away from NYC. Are they still obligated to pay to maintain the train line?
For example, towns on borders could elect which side of the border they are on. And neighborhoods could elect which town they are in.
If borders were more fluid, I think you'd see things like stronger divisions between urban and rural areas, which is a good thing. Illinois is an urban state by population with a massive rural subset. It doesn't make sense to me that two populations with such vastly different needs would be under the same state laws.