Changing times for local governments

Frederick County, Maryland

I find it very interesting that the Washington Post hasn't covered Frederick County's recent consideration of massive privatization of local government functions, which has been extensively covered in the Gazette, (lettesr to the editor, "Paul Gordon: Outsourcing report was an expensive waste of money" and "Privatization report is superficial" and articles "Frederick County residents angry about privatization") but also in the Baltimore Sun ("Frederick County struggles over whether to privatize local services: Proposal to outsource many government functions creates uproar" and "Frederick Co. decides not to move forward with privatization").

A consultant, who led the privatization of government in Sandy Springs, Georgia was retained to do an "evaluation" of Frederick County and said that millions of dollars in savings would result through privatization. A response by a professor at UMD commissioned by the League of Women Voters found that many of the claims were not documented.

Frederick, at this point, has decided not to go forward with a privatization initiative.

Toronto, Ontario

Toronto has been roiled by the ascension of a pretty conservative Mayor, Rob Ford, whose campaign included many claims about waste in government spending. The city spent $3 million on a series of evaluative reports by KPMG in various areas of the government, which considered all programs from the standpoint of whether or not the government was legally required to perform the duties, ranging from heritage conservation to day care to dog licensing. There have been many articles about this in the Toronto Star (group coverage), Globe & Mail, and the National Post (group coverage) with coverage of each new report. From "Arts initiatives, heritage properties next on KPMG hitlist" in the National Post:

Toronto should consider eliminating public arts programs, streetscape investments and heritage property incentives, according to KPMG consultants.

Christopher Hume of the Star, one of the best urban design journalists in North America, wrote this "Ford's way sending Toronto on a downward spiral." From the article:

As the Core Services Sideshow grinds to its foregone conclusion, it’s clear Mayor Rob Ford is less interested in slashing costs than slashing government.

Now in its second week, the spectacle unfolding at City Hall is almost entirely divorced from reality at this point. The script, carefully prepared by the efficiency experts, offers alternatives, not recommendations. This is just Act One.

Though even the bean counters have found waste hard to come by, Ford himself continues to see it everywhere he turns: As recently as last week he was telling a radio talk-show host that “There’s tons of gravy.”

Monday’s session explored the possibility of eliminate licences for everything from small businesses to cats and dogs. These actually make the city a bit of cash, but they, too, are on the table.

A couple days ago there was a 22 hour !!!! Council hearing where 168 citizens spoke out about the proposals. See "I love the smell of democracy in the morning" from the Grid Blog. From the entry:

Don’t cut libraries, they said. Don’t cut grants, they said. Don’t outsource parks maintenance or TTC service or school breakfast programs, they said. Raise our taxes, they repeated again and again to outright derision from Councillor Giorgio Mammoliti. Look harder at the budget, they said, you’ll find more revenue.

At the beginning of the meeting, Rob Ford had said that the Core Service Review was about looking at what things in the city are “need to haves” and what things are “nice to haves”—because, he said, pointing to the budget gap of $744 million, this is why we can’t have nice things. To which one deputant said, “What everyone here has been saying is that the ‘nice to haves’ are the things that make the city worth living in.”

Of the fifteen dozen or so speakers, only three did not outright reject the idea of making serious program cuts: one of those was an anarchist who wanted grant programs slashed and replaced with 144 independent elected neighbourhood councils who would deliver programs, another forcefully demanded deep cuts to the police budget. There was only one genuinely Ford-friendly speaker in the bunch, who thought a donation system and user fees for libraries was the only option for them, and that the size of council should be cut in half.

Jefferson County, Alabama (Birmingham, Alabama is located there)

The Associated Press reports in "Alabama county readies for record bankruptcy: More than $3 billion in debt linked to corruption scandal," that Jefferson County, Alabama is looking to declare bankruptcy, rather than to increase the price of water and sewerage services to pay bank loans taken out to pay for new piping systems, money which was also misused by elected officials and contractors. From the article:

A court-appointed official last month recommended a 25 percent rate hike for sewer customers, whose average residential bill would increase from $37.74 a month to $46.88, calling it a necessary step toward financial viability. Commissioner Sandra Little Brown said the 25 percent increase is too high, and she prefers filing bankruptcy since cost increases could be limited to the single digits.

The county’s problems result from a mix of outdated sewer pipes, the rough economy, court rulings and public corruption.

Just based on the article, I'd say probably a bankruptcy judge wouldn't accede to the county's arguments, that they have the ability to collect the money in higher rates, and the bond holders aren't responsible for the graft.

Service consolidation amongst multiple jurisdictions

In Massachusetts, New Jersey, and Michigan, over the past few years there have been many examples of smaller governments consolidating what had been separately run agencies, such as fire departments, to get economies of scale. This likely will increase in occurrence.

Pension and other union issues

The City of Vallejo in California declared bankruptcy a few years ago, in order to be able to change the terms of pension agreements, which were bankrupting the city. Dealing with pension liabilities has been an issue that has taken center stage across the country including in Wisconsin, New Jersey, even Massachusetts, and for many cities. See "The Pension-Reform Imperative" and "Pension Reform: Hits and Misses"from Governing Magazine.

In some respects, I consider this a continuation and escalation of the arguments laid out in the book The Future Once Happened Here, which in the section on Philadelphia, discussed how large numbers of vacation days and high wage and pension costs were driving the city towards bankruptcy and Mayor Rendell's response (see "Won't Get Screwed Again" a 1996 article from the Philadelphia City Paper).

And in Montgomery County, Maryland, various laws are being changed from overly favoring unions in management-union matters, to favoring the county (e.g., "Montgomery County Council rolls back police union bargaining rights" from the Post).

Conclusion

Issues concerning taxes, what programs to offer, wage and pension matters, service consolidation, privatization, even bankruptcy are likely to be of issue for more and more local governments, as property tax receipts drop due to rebalancing of housing prices and costs continue to climb.