Georgia Contract Cities Update

Regular readers know that Reason Foundation has been closely following Georgia’s new wave of “contract cities” in the Atlanta area—start-up cities like Sandy Springs and Dunwoody that have recently incorporated and chosen to contract out virtually all of their non-safety related government services. Reason’s new Annual Privatization Report 2009 gave a lengthy update on how things are going in these cities, and today there’s some additional news to report. Synthesizing some recent highlights:

  • In its fourth year of cityhood, Sandy Springs officials have reported that despite a projected 20 percent decline in revenues, operational expenditures and tax levels will remain stable and many planned capital expenditures will still proceed. Conservative fiscal management has produced a budget surplus exceeding $14 million that will be used to cover revenue shortfalls; city officials note that these surpluses are distinct from the city’s current “rainy day fund”—set at 16 percent of the total budget—which will not be tapped. More from Mayor Eva Galambos here.
  • Two of the contract cities—Sandy Springs and John’s Creek— agreed to jointly develop a $3.5 million 911 center in an effort to speed dispatching and improve emergency response times. The cities agreed on a joint contract with iXP Corp. to establish and operate the 911 network, which is expected to roll out soon.
  • The Atlanta Journal-Constitution reports that a major revenue shortfall is forcing the young city of Milton to cancel it’s full service contract with CH2MHill and pursue alternative delivery methods. Like the smaller Chattahoochie Hills which recently made a similar decision (reported in APR2009), they couldn’t afford their contracts and are working with the company to transition out of them. In Milton’s case, officials are exploring the possibility of continuing to partner with the company to provide public works and other services. It’s important to note that in both cases, city officials stressed the point that it was their fiscal condition—not dissatisfaction with the contractor—that drove their decisions and that they couldn’t have gotten up and running without their private sector partners.
  • To me this indicates that we may see an evolution in the models on how bundled services contracts are developed, particularly as they relate to smaller communities like Milton and Chattahoochie Hills that are more vulnerable to economic shocks. But things appear to be going quite well in the larger cities of Sandy Springs, John’s Creek and Dunwoody thus far, so I don’t see this as the beginning of a trend.
  • Last but not least, the Dunwody Crier reports that DeKalb County has officially withdrawn a resolution passed last summer calling for a legal challenge to Dunwoody’s incorporation.

Overall, so far, so good, IMO. Sandy Springs and its contract city peers are demonstrating in real time that there’s really no limit to how far you can take privatization and competitive contracting in practice (as long as your budget allows it, that is). Whenever someone says, “well, you can’t privatize that,” one can always point to these cities and respond, “Why not?” After all, if private contractors can run entire cities…

Reason Foundation’s Annual Privatization Report 2009
Reason Foundation’s Privatization Research and Commentary