Local Government Structure, Devolution, and Privatization

Abstract

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,

Public-Private Partnerships and Cooperative Agreements in Municipal Service Delivery

“…The percentage of towns reporting that an insufficient number of bids had been received for most contracts was 44 percent, 30 percent, and 34 percent, respectively, for small, medium, and large towns. This provides direct evidence supporting the assertion made by Deller (1998) and others that small and rural towns may lack the critical mass to draw private firms into the competitive process. Small and rural towns that wish to develop public-private partnerships may be limited because of the lack of scale economies.…”

“…As noted by Boyne (1998) the literature has also become richly interdisciplinary. However, despite the volume of the literature smaller and particularly rural local governments have tended to be overlooked (Deller, 1998;Joassart-Marcelli & Musso, 2005). This study is aimed at building on the modest number of studies focused on small and rural communities by looking at public-private partnerships in the United States with a focus on municipalities in the state of New Hampshire.…”

“…As outlined by Deller (1998) the ability to effectively enact public-private partnerships by smaller and rural local governments is particularly limited. Public-private partnerships require clearly delineated and enforceable contracts between local governments and private service providers.…”

“…The term can range from contracting with non-profits for the provision of certain social services, to organizing economic development partnerships across multiple jurisdictions, to contracting with for-profit firms for specific services. Some authors prefer the term "contracting out" (Hirsch, 1995a) to describe a wide range of processes that allow a municipality to use competition in the bidding process to drive down costs (Linowes, 1990;Deller, 1998;Williams, 2003). Much of the available empirical literature, however, has tended to focus more narrowly on contracting with for-profit firms and is widely referred to as privatization.…”

Sustainable Administrative Reform Movements Policy in Joko Widodo's Administration

“…The more legislative products are produced by those government branches, the more diffi cult it is to synchronize those policies. The structure of government has been a complex subject, as illustrated by some scholars who assert that a complex structure influences the decision-making both in organizations and fi nance (Banerjee, 1971;Benton, 2002;Deller, 1998;Lewis, 2000;Macdonald, 2008).…”