The rules of the game have changed for rural local governments. The explicit policy of devolution has placed greater responsibility on the door step of local governments at a time when the intensity in the cry for tax reductions has increased. The trade-off between greater local responsibility and the risk of higher costs due to scale and managerial inefficiencies has renewed the debate over local options. One policy option that is receiving significant attention is privatization, or the contracting with private companies to produce or supply the government service. A critical review of our current thinking is reported in this article. Specific attention is paid to alternative local government structures, the experiences governments have had with privatization, and the unique problems rural governments face when considering privatization. In the end, privatization may not be a viable option for smaller rural governments where cooperative arrangements to jointly supply the service across local jurisdictional boundaries presents meaningful opportunities.B oth rural and urban government officials, faced with increased local resistance to higher taxes, increasing expenditure needs, weakening financial support from higher levels of government, and the growing pressure to "do more with less," have accelerated their search for alternative ways of delivering local public services. Coupled with the general conservative shift at the federal level, the need to maintain a balanced budget at the local level, and the trend in the private sector to become "leaner and meaner" as a means to increase earnings and profits, has brought the downsizing of government at all levels to the forefront of public discussion.At the same time, many local public officials are faced with rising costs to maintain an aging infrastructure, accommodating the needs of special populations, satisfying rules and regulations imposed by higher levels of government, and funding new investments, to meet the demands of a growing economy in some instances, or to maintain critical services in the face declining economies. While many herald the • Steven C. Deller isassociate professor andcommunitydevelopment specialist,