Privatization saves money and improves city services

Business StockSnap CLKICRAJMW

It’s time for the public to realize that for all the money they pay to city governments, they can usually get more bang for their buck.

What is the purpose of city government?

If you’re an ordinary person, you might figure something like the establishing of certain types of rules (mainly around business and building) and the providing of certain types of services (from parks to policing).

City residents, business owners, developers and visitors pay taxes with which we generally expect whoever it is in City Hall to responsibly use to carry out the aforementioned tasks.

The rule-making, administrative ordinance-passing side of city government is one thing. The providing of services is another.

Ostensibly, the goal of municipal service-delivery is to provide services the taxpaying public wants and needs, effective, efficiently and at a reasonable cost.

It shouldn’t matter, in theory, if a city can do this with in-house employees or if they contract out to a private company to do the work or if they don’t get involved at all and let private citizens work things out, right?

Services are services.

But what if, say, government employees with an incentive to keep things in-house no matter what were to band together, pool their money together and ensure the people with the power to decide how services are delivered and by whom are on their side and won’t do anything contrary to the interests of government employees?

That would be crazy right, almost corrupt?


Well, that’s essentially the status quo in cities across the state. And the consequences are real.

Besides the higher costs city taxpayers pay for lesser service, there’s the ongoing problem of pension crowd-out, which is when the rising cost of covering the cost of city workers’ pensions crowds-out money that could’ve otherwise gone to city services.

Back in 2018, the League of California Cities warned, “Rising pension costs will require cities over the next seven years to nearly double the percentage of their general fund dollars they pay to CalPERS.” Cities like Los Angeles have long had to set aside around 20 percent of their general fund budget toward pensions. That’s a lot of money that could’ve gone to, I don’t know, paving the city’s horrible streets or getting the homeless off the streets or fighting crime.

If you see someone is “Proudly endorsed by the Blah Blah Peace Officers Association” or SEIU Local Whatever, with a glossy mailer showing smiling city workers, yeah, those are the people corrupted by the public sector unions who won’t really ever challenge what benefits the unions.

They could get a report stating that this or that service currently provided by a city could be done just as well by a private company, at significant savings to the city, and then toss it in the trash because they don’t want to anger the public employee union whose members would be impacted.

An example of this happened just before the pandemic in the city of Riverside, where the council received a report which, according to the Southern California News Group, “said the city could potentially save a significant amount of money by outsourcing” trash collection to private companies. The city at the time picked up trash in two-thirds of the city, while a private company performed the task in the rest of the city.

Most of the council members understood what was said in the report and dismissed it anyway, with one council member even suggesting a better idea would be to have the city take over all trash collection in the city. “That way today we can walk away with clarity for current staff about the status of their jobs being in-house,” Councilwoman Erin Edwards, backed by SEIU 721, which represents city and county employees, said. “After this meeting, the conversation would be, ‘Do we bring it all in-house or do we continue the status quo?’”

I think this could be said accurately of pretty much any city: there’s no reason for the government to be in the trash-collection business. There are plenty of private companies around the country that perform this task. There’s no need for government employees to do it.

Now, someone might said, “OK, sure, but that’s just trash collection, what about all of the other things cities do?”

Well, to that, I refer you to consider the following.

“Virtually every category [of public services] has been or is being provided by a private organization somewhere in the United States: police, fire, paramedics, roads, water parks, recreation, garbage – even tax assessment,” wrote Robert Poole four decades ago in “Cutting Back City Hall.”

One of the cities that came closest in recent years to pulling this off is Sandy Springs, Georgia, which, upon its incorporation in 2005, sought to outsource as many public services as possible to the private sector.

This is how it worked according to a 2012 New York Times story: “Applying for a business license? Speak to a woman with Severn Trent, a multinational company based in Coventry, England. Want to build a new deck on your house? Chat with an employee of the Collaborative, a consulting firm based in Boston. Need a word with people who oversee trash collection? That would be the URS Corporation, based in San Francisco.”

A few years ago, Sandy Springs walked back some of this, figuring they could apply some private-sector principles while bringing things in-house. But Sandy Springs showed that, yes, even in modern times what Poole observed in 1980 still holds up.

Many of the tasks city governments take on can in fact be done just as well, even better, by the private sector. And they can certainly be done more flexibly than public employee unions would prefer.

Public sector unions will fight any and every reform to how their employers do business. Firefighters unions, for example, act like it’s in the gospels for fire departments to provide paramedic services (which could be and often are done by the private sector) because they don’t want anyone to notice that most municipal fire departments are basically just glorified, overly-expensive emergency medical organizations which sometimes put out fires.

But it’s time for the public to realize that for all the money they pay to city governments, they can usually get more bang for their buck. The key is a willingness on the part of city leaders to put the interests of the taxpaying public first and ensure all city operations are done as efficiently and effectively as possible, even if it takes outsourcing to the private sector to do it.

Sal Rodriguez is opinion editor for the Southern California News Group and a fellow for the Pacific Research Institute He is author of a forthcoming Free Cities Center book on privatization. This article is reprinted from SCNG’s special section on cities. Write to him at [email protected]


Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

Scroll to Top