One glowing local government

Citizens of Australia and New Zealand, take note of the below YouTube video the next time your local government increases your council rates or unnecessarily meddles in your daily life.

Sandy Springs, Georgia is a northern suburb of Atlanta that is home to around 95,000 people. In 2005, Sandy Springs took the novel step of annexing itself from the City of Atlanta and forming its own government (termed ‘incorporation’). It set-out to form a new kind of city – a fiscally accountable city whose goal it is to provide quality services at a reasonable price. In order to achieve its goal, the Sandy Springs’ government outsourced the provision of virtually all services typically provided by local (municipal) government. And the results appear spectacular. Here are some highlights from the clip:

  • While local municipal governments throughout the United States are mired in debt and facing crippling pension obligations, Sandy Springs has no long-term liabilities.
  • Sandy Springs manages to provide its services at around half the cost of the rest of Georgia’s municipal governments;
  • At the same time as Sandy Springs has reduced its costs, it has significantly boosted infrastructure investment, including: widespread paving of roads (to date it has paved around 90 miles of streets); built several new parks, several of which have won awards; and built a state-of-the art traffic management system, which has saved on fuel use, time and reduced traffic congestion.
  • Despite the significant boost to capital investment, Sandy Springs has not increased taxes and has built significant cash reserves. Meanwhile, the other Georgian municipal governments (as well as many others throughout the United States) have increased taxes.
  • Reflecting the popularity of Sandy Springs’ model, at the first election following incorporation all incumbent officials were re-elected with overwhelming majorities.
  • Since 2005, four other Georgian cities have incorporated and are implementing the Sandy Springs model.

So while Australian and New Zealand local governments continue to bury their constituents in a cycle of bloated bureaucracy, rate hikes and unwanted interference (stifling development in the process), Sandy Springs’ local government is focused solely on providing the essentials efficiently and effectively.

Food for thought.

Unconventional Economist
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Comments

  1. The Peak Oil Poet

    The info above is meaningless unless we have a breakdown of who lives there

    like if every one of those 95K people is a millionaire….

    nonetheless, getting rid of government is always a positive

  2. It doesn’t always go this smoothly! Queenstown, New Zealand being an early casualty of this type of system: “QLDC paid … $3.05 million for CivicCorp amid claims of “bad blood” between council..and (Civicorp). QLDC bought out CivicCorp – set up.. in 1998 – because of public criticism against regulatory functions going to a private company with a profit motive.”

    http://www.scene.co.nz/1335a1.page

  3. Totally OT. But having lived in ATL for 3 years from 2004 to 2007, it really is a very special place. And having bought our car in Sandy Springs, was nice to see some of the things they do over there are actually ‘good ideas’ rather than the big bad US is going broke commentary.

  4. CITY STARTS WITH CLEAN BALANCE SHEET, OPERATES FOR 6 YEARS WITHOUT BECOMING INSOLVENT!!! Who new it was possible?

  5. A little more from Wikipedia:

    ‘Many residents expressed displeasure with county services, claiming, based upon financial information provided by the county, that the county was redistributing revenues to fund services in less financially-stable areas of the county, ignoring local opposition to rezoning, and allowing excessive development. Many residents of unincorporated and less-developed south Fulton County strongly opposed incorporation, fearing the loss of tax revenues which fund county services. County residents outside Sandy Springs were not allowed to vote on the matter. Efforts such as requesting the U.S. Justice Department to reject the plan were unsuccessful.’

    Was it escapism?

  6. Ronin8317MEMBER

    The medium income in Sandy Springs is over 110K USD in 2008, and for a population of 90,000, it collected over 87 million in revenue for a year, so around $967 per resident. Compare that to a typical council in Australia, say Parramatta. Revnue is 166 million on a population of 172,000, which works out to be around $965 per resident as well

    Outsourcing is not much cheaper.

    • What would be a better comparison would be Parra Council revenue in 2008, (Rater than 2011) and the rate of change from when S.S implemented their program.

      I think that’s where the ‘cheaper’ side comes into it, not just a comparison of $ per resident but the rate of change, which is important.

  7. Sandy Springs median household income: $106,240 (2008 estimate).

    Median household income in the southern USA: $40,773 (2004 census).

  8. So the rich of Sandy Springs are getting richer (less taxes) whilst the poor of Fulton County are getting poorer (support from the rich has ceased). This is good? If so, let’s segregate all the poor areas and deprive then of support from the richer citizens located elsewhere.

  9. Leith,

    There are certainly good ideas out there in that video, but methinks it is a wrong example for pointing out unnecessary meddling from local government.

    This model will certainly work well in a few select communities, but it wont work if every city tries to do it uniformly all across the board. Sandy springs is a rich locality, surrounded by quite a few poor areas.

    Other way to think about this is to ask: where do the residents in Sandy Springs make their money, actually quite a lot money. I will not be surprised if it turns out that many of them make their dough outside Sandy Springs—Sandy Springs is not a closed community in an economic sense. So apparently, it is quite natural for rich people in neighborhood communities to gravitate toward rich Sandy Springs and then demand that government be damned.

    Government is always too big and too bad and too wasteful if you are rich, but ask a poor “loser” and you will hear quite different story.

    • “Sandy Springs is home to over 8,000 business and the headquarters of more Fortune 500 companies than anywhere in the State including Atlanta. United Parcel Service,[27] Newell Rubbermaid,[28] and First Data are all headquartered in Sandy Springs. Global Payments, Inc., Mirant Corp., Spectrum Brands, and Wendy’s/Arby’s Group, which are Fortune 1000 companies, are also based in the city. The city is also home to Children’s Healthcare of Atlanta, InterContinental Hotels Group, IBM Internet Security Systems, Northside Hospital, Porsche Cars North America and Saint Joseph’s Hospital.”

      http://en.wikipedia.org/wiki/Sandy_Springs,_Georgia

  10. It seems that they way they keep costs down is by making the people who do the work live outside their government’s zone. It’s just another form of externalisation and cannot work if everyone tries to do it because where would the workers live then?

  11. From what I can see they outsourced mainly (only?) public works. Research indicates that Public Works is one of the few areas where public private partnerships are often effective and efficient, which has to do with the type of work: well defined scope, timeline, budget and tangible. Unfortunately not all public sector tasks fit this category, so you may find not “everything” was outsourced as this video claims…

    Other than that, outsourcing of public works is hardly revolutionary in (local) government.

  12. Internet problems mean I have not watched the video. However, many councils around Australia already outsource parts of their work, including garbage services, road construction, street cleaning, and in some cases maintenance of water infrastructure. They remain responsible for decision-making, including zoning decisions and development decisions (subject to state intervention). I cannot see much benefit in out-sourcing this. I also wonder whether the former employees of Sandy Springs were happy with the out-sourcing decision.

  13. Hello,
    Atlanta is a highly troubled city. Some of its lower income suburbs are rife with gang problems, especially drug dealing gangs, and the downtown area or metro area of cities typically have relatively high tax rates, so it would not be surprising for an upscale suburb to want to peel off and do its own thing with its wealth and other advantages. Incorporating wealthy areas into a city tends to create net gains in shifting money from the new the tax base to the more difficult areas of the city and, therefore, net losses, to the more upscale areas bearing a bigger share of the burden.
    The matter of public-private or privatizing public services in such a city, especially a new one, has the advantage of a fresh start with respect to so many things, as that is often the advantage of fresh starts, whether private or public. In some cases, assets are even sold and leased back, new contractors may bid especially low to get their foot in the door, etc., and employees are younger and so are cheaper in a number of ways, employees may live outside the area as they often cannot afford to live in the area, wages and benefits are cut, and so on. In addition, there is the advantage of “local control,” which in some ways means greater flexibility, responsiveness, and so on. This works both ways. Indianapolis in the 60s, if I recall the date correctly, went to a uni-gov system of incorporating most of the population center of the city into one government unit or a “uni-gov.” I think Nashville, Tenn. followed suit, and, maybe Jacksonville, Fla., as well. I am not sure of the present number of uni-gov cities in the US. So, it can work both ways in terms of efficiencies, but certainly the upscale city areas can retain more of their tax dollars by peeling off from the on average poorer larger city area. They become an enclave of municipal wealth.
    The disadvantages of privatization or outsourcing (although some suburbs of L.A. outsource to the main city government unit in the area, so all outsourcing is not privatization) is loss of accountability, loss of public transparency, sending more tax dollars out of the city to the contracting company and to their employees who may often commute in, a new lower level of pay for the people doing the work that was formerly done by city employees, and, of course, de-unionization of the workforce, as Republicans tend to be anti-union, which often means an advantage for the Republicans in the area. On the up side for operational efficiency, whether toward or away from uni-gov and even private to public or public to private, is that sometimes the change process actually deals with some problems that were otherwise being neglected. This is a kind of passing Hawthorne effect in some cases, but in others just a matter of unfreezing or displacing obstructive elements resulting from new arrangements of authority or intense assessments. In other words, old neglected areas get a new look.
    What happens, sometimes, is the private contractor then becomes unionized. This, however, still results in the workers being paid less than if they were city employees, since the contractor is subject to competition from other private providers making the city a lower bid or lower offer to do the same services. Employee compensation tends to be the vessel from which all of the advantages are drawn for privatization projects, despite claims about efficiencies of scale, and so on. The result is that what were once lower middle class municipal jobs tend to shift to become more slum or near slum dweller jobs, with the exception of a few technical and supervisory positions. The shift in wealth disparities grows and job insecurity, health benefits insecurity, and retirement security increases.
    Sam