What Happened?
After an initial attempt at privatizing the Massachusetts city’s IT operations was squashed, the Methuen mayor and City Council are revisiting the proposal to alleviate burdens on public agencies and reduce overall costs. The city’s computer systems and IT department is not operating at full efficiency. Bringing in a private company to manage the IT demands could be a smart move for taxpayers and municipal agencies alike by generating an estimated annual savings of $200,000.
The Goal
The privatization proposal in Methuen is on par with similar moves being made across the country. Local governments facing tightened budgets and increasing demands are looking to public-private partnerships to lower spending without sacrificing quality of service to residents and businesses.
While Methuen has an allotted $666,629 budget for its municipal IT budget this year, Mayor Zanni predicts a privatization strategy would reduce that total while improving functionality and overall performance.
Zanni recommends allowing IT companies to go through a bidding process, allowing the city to select the most affordable and customizable option for a trial one-year contract starting July 1, 2014. A three-year extension could then be discussed if the company proves successful. One interested company has already assessed the city’s IT infrastructure, services and needs. The organization promised to reduce the city’s IT-related costs from $835,621 to $635,776 annually.
In the past year, Zanni has proposed IT privatization to the City Council, and has seen the topic shelved or defeated repeatedly. With the addition of new council members, it is more likely the mayor will have enough support to move forward with the strategy.
A Private Matter
Local governments are finding significant savings after outsourcing various services to private companies such as park preservation or waste maintenance. In Quincy, Illinois, new garbage and recycling options have been outlined that could reduce costs to taxpayers while boosting efficiency. The Quincy City Council is investigating three options for how garbage and recycling will be picked up throughout the community, two of which involve privatization of the service.
The privatization strategies call for adding a fee to local water and sewer bills on a quarterly basis to cover the cost of outsourcing the service to a private party. The different options vary on how the fees would be distributed throughout the year, but both focus on taking garbage and recycling tasks off the shoulders of the city.
Quincy has not budgeted funds to cover upgrades or repairs for existing garbage and recycling trucks that are in need of maintenance. Thus, if it plans to continue servicing residents with municipal resources, it would face increasing its budgetary deficit while making bigger cuts to other services such as public safety and infrastructure. Unlike Methuen, Quincy officials are considering a 10-year contract with private garbage and recycling providers to ensure an affordable deal with a longer-term strategy.
Detroit has already selected two waste-disposal companies to manage removal and recycling which is estimated to save the city $6 million annually. Finding a middle ground between Quincy and Methuen’s strategies, Detroit is looking to finalize a five-year contract with the parties.
Outsourcing Success
Gov1 has reported on several privatization strategies including airport management and graffiti removal.