"If I were just some weak-kneed kind of namby-pamby politician, I wouldn't have touched this privatization issue with a ten-foot pole. Political leaders who aren't willing to take risks don't deserve to be in office." With those words, Flint Mayor Woodrow Stanley proved that city governments don't always have to privatize to get their work done more efficiently. In Flint's case, all they had to do was think about it!
In 1993, Mayor Stanley decided that city garbage collection was costing Flint too much money. He solicited bids from private companies to see if any could do the job for less. The combination of a private firm handling garbage, compost, bulk items and trash bins, and the city taking care of leaf pickup and special clean-ups, Stanley discovered, could cut Flint's annual $6.2 million garbage bill by a whopping $2 million!
At that point, the city employee union in Flint scrambled to be competitive and offered to shave about $1.4 million from the garbage budget. The union proposed increasing the number of stops on each route from 665 to 775, reducing the number of shifts from two to one, cutting the sanitation staff from 47 workers to 35, picking up bulk items along with regular garbage instead of doing that on overtime. Finally, the union offered to require the garbage crews to actually work a full eight-hour day, instead of going home early as they had often done in the past. The mayor and city council, rather than endure a fight with the union to save a little more, accepted the proposal and did not privatize. They kept garbage collection "in-house," but still saved the city $1.4 million per year.
The Flint example shows that considering privatization as a serious option is good stewardship of the public purse, something taxpayers have a right to expect. Thinking about the competitive alternatives in the marketplace prompts officials and workers to open their minds and appraise public services in ways they never pondered before.
Privatization in its broadest sense is the sale of assets or the transfer of services from monopoly government to competitive private enterprise. The theory is grounded in the way people respond to incentives, or the lack of them: Tie up the performance of a task with red tape, bureaucracy and politics, and the result is usually mediocrity at great expense. Infuse competition, accountability and the fear of losing valued customers into the task and mediocrity becomes the exception, excellence the rule. The private sector exacts a high price from the inefficient for poor performance, prompts the service provider to be concerned with the wishes of customers, and spurs a dynamic, never ending pursuit of improvement. Most people now believe the public sector could benefit from some of that.
All across Michigan, a privatization revolution is changing the nature and functions of local government. Mayors, city councilpersons and county commissioners are putting the concept to work at a pace that's increasingly hard to keep up with. Almost every duty of local government has now been privatized, somewhere in Michigan, by some municipality, by one method or another, partially or totally.
Traverse City doesn't pick up garbage any more; private firms under contract with individual citizens and businesses take care of it just fine. Ann Arbor turned over its parking structures to National Garages, Inc., which made them cleaner, brighter and safer than they ever were in the past. By contracting with a private company, Alpena transformed its problem-ridden wastewater treatment plant into a model facility, saving the city a quarter million dollars a year.
A for-profit education company is now providing new opportunities for students in the public school it runs in Mount Clemens. In Kalamazoo and Battle Creek, a California-based firm is making downtown parking more customer-friendly by managing meters, ramps and lots. Gypsy moths are now suppressed in Midland County not by the county itself, but by a private firm owned by a former county employee. The small town of McBain in Wexford County is earning widespread acclaim for success in privatizing its economic development efforts.
And in Charlotte, even the dead are benefitting from a unique public/private partnership: residents there get a discount on burials at a private cemetery in exchange for the city clearing its road of snow.
Privatization in Michigan is emerging as a bipartisan, good-government thing to do. Fortunately, the more it's done, the more officials learn about how to do it right and do it well. Saving money and improving services are popular with just about everybody.
It's no wonder there's a privatization revolution underway in Michigan. As Mayor Stanley in Flint proved, it's one of the few things a community can benefit from even when it doesn't actually do it.
The Mackinac Center for Public Policy is a nonprofit research and educational institute that advances the principles of free markets and limited government. Through our research and education programs, we challenge government overreach and advocate for a free-market approach to public policy that frees people to realize their potential and dreams.
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