Monday, April 25, 2011

University of Georgia Numbers are Wrong. City Cuts Half Estimated Budget

By 1989, the city of Sandy Springs, just north of Atlanta, had had enough. The city of about 90,000 people had grown tired of paying high taxes to Fulton County, and seeing virtually no local investments or improvements. People in the city thought they could do better on their own. They were right.

For years, lawmakers from the area would draft and propose bills for incorporation, and every year legislators from neighboring cities in the county blocked them, probably because they didn’t want to lose the big chunk of tax revenue that came from the area. By 2005, HB37, a bill for incorporation, was passed and signed by Governor Sonny Purdue. When voters went to the ballots to approve the referendum, they voted overwhelmingly in favor by 94%.

What happened next was an experiment that proved to be quite innovative. The city outsourced nearly all of its city services. Garbage management, street maintenance, communications, technology, traffic services…all of it was handled by private companies, and handled well.

The University of Georgia had estimated in a study that the city would need a staff of 828 employees for the city to function. Another example of how the ivory tower is out of touch with reality and insulates itself from competition and competitive prices.

They city has employed about 471 since incorporation, and only 271 are public employees, relying on tax dollars. The Mayor of Sandy Springs, Eva Galambos, told John Stossel in 2010, “We have fewer employees than the city to the north of us and we have exactly the same population.”

Sandy Springs began use of their own police and fire departments in 2006, which today employs 128 officers and 97 firefighters respectively. However, city officials say there is no burden of long-term pension or healthcare costs. From inception, neither department has participated in defined benefit plans. Both use defined contribution plans, similar to 401(k) s. In addition health insurance is dealt with much like private savings accounts. According to a report from Reason Magazine, the public safety departments use some of the most innovative technology available.

Public schools remain under the broader district control of Fulton County, but other than that, the city currently let’s a contracting firm designate all other city services. The Colorado-based private contracting firm CH2M Hill is the managing partner with a large group of subcontractors. For every need Sandy Springs faces, the firm contracts out to the specialized company who can do the work most efficiently and least expensively.

This hybrid model to run a city has proven to be a success economically. According to Reason, the cost to run a city the size of Sandy Springs should cost around $50 million a year, but by contracting out to CH2M, it cost the city half of that, about $25 million. The city was able to build up its reserves, re-pave 90 miles of road, construct award-winning parks, and implement a state of the art traffic system, which has saved drivers about $12 million, in fuel and time, over a two year period. At the same time, the city has not had to raise any taxes.

The model has achieved notice. In 2010, the city was the runner-up for the Pioneer Institute’s 2010 Better Government Competition Award. The award is presented for innovative ideas and programs that improve effectiveness and efficiency of government. Citizens seem to approve of the new model too. During the first election after incorporation, every incumbent was re-elected for office. In fact, the lowest margin for re-election for any of the incumbents was 84%.

According to a recent article from the Atlanta Journal-Constitution, other cities in Georgia are considering joining the hybrid-city model.

This month, Sandy Springs voted to award contracts out for information and financial services, and they still have five departments in the bidding process including court services, parks and recreation, and public works.,-GA--The-city-of-the-future.aspx

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