Californian town swaps city staff for contractors

Towns and cities across California are cutting local services: outsourcing everything from rubbish collection to policing. That’s because – according to the National League of Cities – they’re facing a projected shortfall of between $56 and $86bn between 2010 and 2012.

Now Maywood, a city of just 45,000 mostly Hispanic inhabitants, just outside LA, is going all the way. It’s sacked the entire city staff and is getting contractors from outside to carry out all local services. It’s now “100 per cent a contracted city”, says the mayor, Ana Rosa Rizo.

Some functions, like the police department and city hall, are being taken over by neighbouring towns.

Things in Maywood came to a head after the city lost its liability insurance – after years of lawsuits against the police department and other city officials. Such was the state of policing, that there are some $19m in claims pending against the department.

The lack of insurance meant the city was unable to take on any staff, leaving it with little choice but to lay everyone off, from city hall officials to road cleaners, and outsource the lot.

Maywood’s PR officer Magdalena Prado says other cities across the US are watching to see how well it works: “We’re the cutting edge here. We’re the tip of the spear,” she said.

Redundancy deals have been expensive – and unions have protested in vain – but the city has saved millions of dollars so far, often by rehiring former employees on contract at much cheaper rates.

Nearby San Jose has also decided to tackle a $118 budget defict by laying off all full time police and janitors and hiring them back more cheaply. According to Andrew Belknap from the government consulting group Management Partners: “You can do across-the-board cuts for only so long. It’s gone from the tactical cost cutting to get through a recession, to in some cases saying we have to exit that business or service altogether.”

Los Angeles County now has contracts with 42 out of 88 cities within the region to provide their policing.

But if you think this is a new phenomenon you’d be wrong. Way back in 1954, the city of Lakewood in California created a model structure known as the Lakewood Plan: contracting out just over 40 per cent of local services to private firms and other agencies, while keeping control over others. Dubbed the ‘City without a payroll’, the local authority sets policy and annual budgets and looks after community planning and monitors the contracts, while promising to maintain high level local services at a much lower cost.

Of course in purpose-built cities like this, or tiny areas like Maywood – it’s much simpler to make such experiments work. Whether it’s a model that can work in complicated, large cities, without turning local government into a for-profit business run by anonymous corporations is quite another matter – public spending cutbacks notwithstanding.