Many municipalities have successfully harnessed private sector partnerships to deliver municipal services more efficiently. Cities such as Indianapolis and Phoenix have created extremely successful models that are gradually being replicated and built upon by other cities. The potential for more efficient service delivery through outsourcing municipal functions is now so widely accepted that big city Democrats such as Chicago Mayor Rahm Emanuel and Los Angeles Mayor Antonio Villaraigosa have turned to the private sector to improve a number of municipal facilities including airports, public transportation, parks, and schools.
While partnering with the private sector to deliver some municipal services under some circumstances is widely accepted, one might wonder if there is a limit to what cities can outsource. Residents of Sandy Springs, Georgia have tested the limits of municipal outsourcing. Incorportated in 2005, the city has contracted out virtually everything. The only two services that are delivered by the city are police and fire services, because the insurance premiums that would be required of private companies would be prohibitive. Everything else, even licensing, has been contracted out. The sky hasn’t fallen. In fact, the city has no long term debt or unfunded liabilities.
The story of Sandy Springs has been making the rounds since ReasonTV released an excellent video about the city last year. Discussion about the city was reignited by a New York Times article on the city this summer, which is well worth the read. There is also an interesting discussion of the article at Marginal Revolution.
While outsourcing of municipal services on this scale is unlikely to happen in existing municipalities (except, perhaps, those on the brink of bankruptcy), the Sandy Springs story does suggest that cities can benefit from taking municipal outsourcing much further.