Managing Cities 2010 Style – Fire Everyone!

When budgets get tight at the municipal level, administrators tend to cut programs, impose furlough days and lay-off workers according to one or more priority and seniority lists. Sometimes pay cuts can supplement the above, but since this economic slump is likely to continue for years – taxes on reduced income, lower sales volumes and reduced property values suggest no end in sight – new action plans are being created and tested across the country. One small town, on the edge of the Los Angeles, CA monolith, has another solution: fire absolutely everyone… and outsource the essential services to others.

Maywood, California imposed the above drastic measure in June. Residents were bracing for rampant crime in the streets, shuttered parks and a complete denial of traditional city services. But the firing of employees was not intended to eliminate basic services; instead city managers reasoned that other, larger, municipalities would be able to “add capacity” while maintaining their existing levels of overhead, something a smaller government would not be able to do. The July 20^th New York Times: “While many communities are fearfully contemplating extensive cuts, Maywood says it is the first city in the nation in the current downturn to take an ax to everyone… The school crossing guards were let go. Parking enforcement was contracted out, City Hall workers dismissed, street maintenance workers made redundant. The public safety duties of the Police Department were handed over to the Los Angeles County Sheriff’s Department.”

But the change became a blessing; Maywood was hardly the poster child for competent government, and the scandal-plagued police department not only sucked up half of the city’s revenues, but it threatened the very survival of the town as a whole: “A report by the state attorney general last year concluded the culture of the department ‘is one permeated with sexual innuendo, harassment, vulgarity, discourtesy to members of the public as well as among officers, and a lack of cultural, racial and ethnic sensitivity and respect.’ … There are $19 million in claims pending against the police, which made it effectively impossible for the city to get insurance for any of its employees. If Maywood did not dismiss the municipal work force, officials said, bankruptcy would have been the only option.” The Times.

The plain fact is that everything seems to be working better, and except for the police force which seemed to be beyond repair, most of the other “fired” governmental workers were rehired by the outsource entities now providing the underlying services. The new Sheriff’s deputies on patrol have gone out of their way to reassure the residents, and the general response has been overwhelmingly positive. The financial benefits along the way have made more than one taxpayer smile: “The budget for the Police Department last year was nearly $8 million, more than half of Maywood’s revenues. The contract with the Los Angeles County Sheriff’s Department will cost about half of that. Insurance premiums for the city have fallen to $200,000 from $1 million.” The Times.

While this most definitely is not the “master plan” to save American cities, it does represent the need to look beyond traditional remedies to potential “big picture” solutions. With fringes and pension costs literally skyrocketing out of most state and local government’s range of affordability, outsourcing at least shifts the burden on such benefits to the vendors supplying the services, which in turn have to insure that their benefits are in line with its billing rates. I fear that the solution that will ultimate reach too many municipal governments, ripped apart by political interests, will be a filing for bankruptcy under Chapter 9. Maywood seems to have side-stepped that risk; more power to them!

I’m Peter Dekom, and I’m looking for answers.