A national model for America’s Decaying, Bankrupt Cities
By Phil Kent

The front-page July 19 Wall Street Journal headline jarringly declared: “Record bankruptcy for Detroit: Motor City is ‘broke,’ governor says, as it seeks to restructure $18 billion in debt.” Then came a similar headline from the August 6 Breitbart News: “Rahm’s Chicago: $1 billion financial shortfall forecast by 2015.”
Detroit and Chicago, of course, are not the only big cities in dire financial straits. An August 5 CNBC report studied the nation’s troubled big cities and found a common denominator: Too much debt and too generous public pensions. The next day the Journal’s Stephen Moore specified 20 major decaying cities facing financial ruin and how Chapter 11 bankruptcy appears to be the only option to press the reset button and wipe the slate clean.
How can this municipal mess be addressed? Oliver Porter— a lecturer/consultant with an engineering background, an apostle of free market economics and the first interim city manager for Sandy Springs, Georgia— cites a national model and solutions for cities and their taxpayers.
First, some history. Sandy Springs became a city in 2005 through a popular voter referendum. New Mayor (and retired economist) Eva Galambos and the City Council quickly launched what Porter calls the first American city that “outsourced almost everything.” Eight years later, the city of 100,000 people boasts of new roads, more neighborhood sidewalks, a state-of-the-art traffic system and award-winning parks. All this has occurred with no tax increases— even though major capital improvements have been funded.
Before cityhood, Sandy Springs was part of unincorporated Fulton County and residents were poorly policed while paying high taxes for few services. “In June 2005 we had to find vendors for public services, and we had to have them in place when the city began on December 1,” Porter remembers. “I don’t know what you would do if you had to have public services in six months, but (shopping around with private vendors) is what I did.”
He bid out 12 main services to companies that often outsourced to smaller vendors. When certain guarantees couldn’t be met, the city chose someone else. “In the contracts,” he says, “the companies providing the services had to pledge to have a live person answer phone calls and emails 24 hours a day, seven days a week, They also had to commit to responding to a problem within 48 hours— and the appropriate elected Council member is kept in the loop with the progress of the work order or issue.”
Porter further explains this public/private model:
“The key is writing the contracts well. But there is incentive for the companies because if they screw up, we can use someone else. That doesn’t happen in government. It is also essential that a cost-benefit analysis be done with each contract. Sandy Springs outsources everything with the exception of public safety, mainly because of liability issues. However, police officers and firefighters are on 401(k), defined contribution plans, not pension programs. The city owns no buildings – not even city hall— and little equipment, which means it doesn’t have to worry about depreciation on property or assets. So the city has no long-term liabilities.”
“The Sandy Springs example is catching on in Georgia,” he proudly notes, “with five other cities now following the model and others, including counties, considering or opting for more privatization of services. The model is also capturing national attention. “In recent years,” he says, “I’ve been increasingly asked to give advice and lectures around the country, especially in regard to Detroit’s problems. Bloated government and pension obligations have pushed many cities to the brink and more politicians are being forced to look at what Sandy Springs has done.”
Porter also looks at larger vistas: “This is also an international model.” In this vein, he tells of his travels to meet city officials and government ministers of countries ranging from Great Britain, Iceland and Japan to Latin American nations and even the former Soviet bloc country of Georgia. “The big cities in trouble need to be looking at this model,” he says, “but the big obstacle is politics because local officials all too often aren’t willing to consider alternatives because they were elected under one system and they are afraid to look at other models even if they are more efficient and cost-effective.”
“I tell every city official I meet: “Your main job is not to supply jobs— it is to serve taxpayers.”
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