Privatization Gaining Steam Among Broward Cities

Per the South Florida Sun Sentinel, some cities in Broward County, FL are considering privatization as a strategy to do more with less in response to ongoing budget challenges:

Hoping to protect union jobs, Hollywood commissioners last year rejected a proposal to privatize garbage collection. But when residents discovered it meant higher fees and no bulk pickup, their outcry forced commissioners to reverse course. This year, officials are considering outsourcing police, fire, code enforcement, building and engineering services as well.

Pembroke Pines, once one of the nation’s fastest-growing cities, may farm out its building and zoning department because permit fees have dried up in the sputtering housing market. In response, union leaders have pleaded to save jobs by allowing the city to cut pay, benefits or work hours.

Sunrise for nearly 37 years operated the municipal Springtree Golf Club, which will be closed for renovations on June 1. But when the 18-hole course reopens in early 2010, a private contractor will likely take over its management. […]

As governments grapple with sinking revenues and ballooning budget deficits, the idea of outsourcing is gaining steam. “It’s the wave of the future. You will start to see more and more cities contract out,” said Russell Benford, city manager of West Park, which depends on contractors for most of its services. “Now that we’re in a budget crisis, obviously everyone is working hard to control expenses . . . outsourcing allows you to provide services for less money.”

Leaders in Weston and Southwest Ranches, who also rely heavily on contractors, extol the benefits. They say because contractors perform tasks as needed, they are cheaper to use than full-time workers. And contractors’ benefits are often less generous than those of their counterparts in the public sector, allowing governments to hold down costs. […]

Public employee unions argue that ceding control of vital public services will mean less accountability to residents. They say contractors may not be as willing to respond to emergencies. And they worry that when the economy recovers, their cities will be understaffed because it can take time to collect bids and approve contracts. Yet they acknowledge cities need to slice costs.

Plantation officials say they will consider shifting more responsibility to outside contractors for park maintenance, road paving and street striping. The city already contracts out legal services and air-conditioning maintenance.

Dania Beach officials may consider contracting out services such as code enforcement and management of the Dania Beach Marina as part of the 2009-10 budget. Lauderhill, which contracts out for trash collection and some engineering and architectural services, might consider privatizing other services as well.

“It could possibly be cost-effective if you only need someone to come in once or twice a week rather than have someone here all the time,” said Kennie Hobbs, the city’s finance director.

Weston City Manager John Flint said with contractors, the city avoids so-called “bumping,” where unionized workers with seniority retain their high salaries by displacing workers who earn less. “I believe our model works great,” Flint said. “Having competition instills a sense of loyalty for the contractor to want to continue to perform.”

The public employee union comments on privatization predictably rehash the well-worn “privatization = losing control” myth, but as I argued here and here, this is false—privatization offers a way to gain control and accountability over service provision. If a contractor fails to perform, they can lose the contract; by contrast, the most difficult job in the world to remove an employee from is a government job due to byzantine civil service rules. In the former context, mediocrity is punished; in the other, it is assumed (“good enough for government work,” right?)

As for willingness to respond to emergencies, fear-mongering unions offer a canard. If your job is providing services to government entities, then the last thing you’d want to do from a business standpoint is fall down on the job when you’re needed most. That’s not going to keep you winning contracts and expanding your business. And if that incentive isn’t enough, best practices in privatization make use of performance-based contracting. The expected contractor response to emergency situations can be incorporated into the contract upfront so that there’s no ambiguity, with appropriate performance incentives—or financial penalties for underperformance—structured into the arrangement from the get-go.

For a reality check, Broward cities need look no further than cities like Weston—a reknowned “contract” city where most services have been privatized since the city’s incorporation—to see good examples of how you can successfully contract out for nearly any public service and ensure that residents receive high-quality services at a lower cost than traditional municipal operation.

Reason’s Annual Privatization Report 2008
Reason’s Privatization Research and Commentary