Where Flint goes, will Detroit follow? Privatization test case?

27 Feb 2013

Last week, the Governor’s Financial Review Team made official what we’ve all known for some time  –Detroit is in serious financial distress.  It is expected that the Governor will appoint an Emergency Financial Manager but the real questions are what can, and what will, that EFM do?  One interesting issue is privatization or out-sourcing of city services.

In Flint, the EFM (who was appointed over a year ago) recently announced the privatization of waste pickup services which until now, like Detroit, had been provided by public employees.  Reportedly, this change will save Flint some $1Million per year and give the City a short-term infusion of $1.5 Million as the contractor buys the City’s trucks.

Twelve years ago, the decidedly anti-government pro-business Mackinac Center was projecting City savings of up to $6.4 Million by privatizing solid waste pickup. During the 2011 development of Mayor Bing’s Detroit Works project, it was estimated that privatizing Detroit’s waste collection could save the City some $14 Million and it was reported that 30% of waste collection fees were not collected – another $6 Million or more in lost revenue.

Will a new EFM in Detroit follow the Flint example?  If the reported numbers can be confirmed, I’d say it’s likely and advisable, unless the City can seriously restructure its system coupled with renegotiation with the union.

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