Privatizing City Services

Privatizing City Services in Rochester Hills, Michigan

Strained budgets combined with increased demands for public services and public resistance to tax increases have forced many local government across the United States to re-examine how they provide municipal services (Dilger, Moffett & Struyk, 1997, p. 21). One result of this re-examination has been a focus on outsourcing city services to private businesses to economize the city's use of its human and financial resources. This paper attempts to explore the effectiveness of such outsourcing by examining privatization initiatives and experiences in the City of Rochester Hills, Michigan.

Privatizing Municipal Services in the United States

Privatization involves the contracting out of city services to private companies (Van Slyke, 2003, p. 296). Advocates of privatization argue primarily that it can significant reduce the costs of providing services. They also maintain that it can improve service quality, increase management flexibility, provide specialized expertise, and decrease the influence of monopolies (Van Slyke, 2003, p. 297). Detractors point out, however, the contracting out services creates the need for municipalities to spend money and human resources on programs to evaluate and oversee the privately-provided services and their contractors. Detractors also argue that privatization can lead to higher unemployment and underemployment (Van Slyke, 2003, p. 297) and hidden costs, such as increased

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oes not provide waste management services. Rather, residents are required to contract for their own services with private companies at a cost that averages about $250 per year (Gopwani, 2004, n.p.). The City's current consideration of outsourcing its waste management services to a single private company raises the issues of tax increases, service competition and lower costs that privatization discussions usually entail. For example, the city hired a consultant to explore its waste management alternatives. The expense of the consultant, therefore, must be factored into the cost of the eventual waste management decision. Moreover, the consultant had proposed that the city levy a 1.1 mill tax on each of the city's 21,000 households to pay for the service. But the service will not be available to businesses and apartment buildings. Thus, certain city residents would be taxed for a service that they could not use. As a result, many city residents were against both the idea of a tax for the service and the idea that the city would bill them for a service provided by a private company (Rochester Eccentric, 2004, p. A1). Nonetheless, the city contends that outsourcing the service to a single trash hauler will improve service by

Category: Government - P