When City Manager John Szerlag said he would consider privatizing all of Troy's city services, he said if the municipal departments could match the private company bids, he'd keep them.

The city's building department, however, never bothered to even put in an official bid, Szerlag said.

That's because a quick review found that every one of the 22 employees in the building department would have to take a 35 percent cut in pay, an option deemed unacceptable to the city employees, Szerlag said.

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From 2001 to 2009, the city's general fund had subsidized the building department to the tune of $5.5 million dollars, according to Jim Nash, the city's financial services director.

Now, Szerlag estimates that the city will save as much as $500,000 a year by privatizing the department. Earlier this month, the Troy City Council approved privatization of the building department. It starts July 1.

"We are not alone," Szerlag said. "If other cities don't follow suit, they will be in trouble."

The city also privatized management of golf course operations, which included five full-time and 40 part-time employees. That started June 18. The city was able to guarantee a revenue stream of $265,000, regardless of rounds played, within the ballpark of a typical year of golf. And city officials say the private company hired has a much better handle on marketing the golf course to generate more money.

Next up to be reviewed for privatization is the Public Works Department, which includes everything from the city's water, sewer and streets to parks and recreation.

"It will be huge," Szerlag said.

Troy is among the growing number of cities whose financial situation has become more distressing.

The Michigan Department of Treasury gives city "fiscal indicator" scores after evaluating their financial situation. In 2008, Troy received a score of "6" on a scale from 1 to 10 where 1 is the best. A score of 5 to 7 lands a municipality on the state's "fiscal watch." The state's 2009 scores haven't been released yet.

Szerlag said looking at privatizing all the city's services is a matter of long-term sustainability.

"It is something no one enjoys doing," he said.

The transition hasn't come without upsetting some of the city's workers.

According to the Detroit Free Press, Troy's building and zoning director was put on administrative leave after speaking out at a city council meeting about the privatization of his department. Mark Stimac had anticipated being laid off on July 1.

Szerlag didn't comment about the specifics of that situation, but he did address employee morale.

"I liken with what is going on with our employees and our community is that it is very similar to the five stages of grief," Szerlag said.

The first two stages are denial then anger, he said. Then, the employees and community think that "magical dust" will solve the problem.

"Then it goes to depression and then reality based decision making," Szerlag said.


See also:

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Other State and Municipal Reforms and Privatizations

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