That’s what Sandy Springs, Georgia did in 2005. The city kept a unionized police and fire — but outside of them, there are only eight other union employees. All the rest of the workforce is staffed by a private company.
They do the job the union workforce did with about half the number of employees.
Instead of being arm-twisted into providing unsustainable pensions, the city offers a 401(k). The upshot: the city socks away at 25 percent surplus every year
It has spent $185 million on capital infrastructure: it “repaved “147 miles of streets, 874 storm water projects, and built 32 miles of new sidewalks. It has the money for improvements that keep things nice.
“The town is run very efficiently, with zero backlogs in permit requests. Call the city, and you’ll be surprised to find that you actually get a friendly person on the other line! The city has a 24/7 non-automated customer service hotline which fields about 6,000 calls per month. It also has a state of the art traffic system with cameras and a high tech command center,” says this story.
If there’s a downside, this story doesn’t mention it.
Given the way public employees helped burden Stockton into bankruptcy, and how unreconstructed they showed themselves to be during the city manager hiring process, it is tempting to advocate this model.
But remember, the city attempted to privatize the waterworks. That turned into a costly imbroglio that culminated in the return of MUD employees to the union fold.
And privatization may not be feasible in California for other reasons. Ventura County is trying right now. You’d think in the Land of the Free, citizens in a municipality could choose how best to compensate public employees. But no. It’s a court battle. In effect, CALPERS is like a lobster trap: cities wander in, they can’t get out and ultimately they get cooked.
And when a city even considers dropping out of the pension system, CalPERS makes things as rough as possible. Even federal bankruptcy law seems an inadeqate remedy. In Stockton’s case, should the city merely treating CalPERS like any other creditor and give it a haircut, CalPERS would immediately demand $1.6 billion in up-front pension costs.
Then there is the market consideration. If most or all cities in California offer generous pay and pensions, any city that privatized may have difficulty attracting the best employees.
Still, CalPERS’ behavior is the best argument for privatization. It has probably dissuaded other states from allowing public employees to unionize. They must look at the quagmire of eternally burdensome debt CalPERS brings in its train, and think it would be crazy to go there. And so it was.