Arizona stands poised to take the lead in restoring fiscal responsibility to local government. With near-unanimous support from Republicans in the state Senate, both houses of the Legislature passed Senate Bill 1322 to furnish all large scale city services, other than police and fire protection, through open and competitive bidding. Based on similar “managed competition” approaches adopted by cities throughout the country, this crucial reform promises to save taxpayers hundreds of millions of dollars. SB1322 landed on the desk of Governor Jan Brewer at exactly the right time—when bonding agencies and financial experts are warning of widespread risk in the municipal bond market because of unsustainable obligations for payroll and benefits owed to unionized local public employees.
SB1322 did not just appear out of thin air. It reflects the in-depth research that the Goldwater Institute performed a couple of years ago in the policy report, “A New Charter for American Cities.” That research shows bidding out significant city services and requiring the bidders to shoulder the cost of any employee benefits provides a transparent and politically feasible way to get out from under payroll obligations that are threatening to bankrupt Arizona cities. And by injecting competition into a pure monopoly, common sense and the historical track record of similar reforms elsewhere show SB1322 will help cities deliver higher quality services at a substantially lower cost and with greater innovation.
At the same time, the real economic cost of furnishing city services will become known to the public. This will help policymakers build a greater consensus around what services should have the highest priority in our continued economic slump.
With SB1322 awaiting her signature, Governor Brewer has a tremendous opportunity to put large Arizona cities on a glide path that will deliver fiscal responsibility and government transparency, ultimately lifting a potentially bankrupting burden from the shoulders of both cities and taxpayers. Let’s hope she makes the right choice.
Nick Dranias holds the Clarence J. and Katherine P. Duncan Chair for Constitutional Government and is director of the Joseph and Dorothy Donnelly Moller Center for Constitutional Government at the Goldwater Institute.
Goldwater Institute: A New Charter for American Cities
Arizona Legislature: Senate Bill 1322
New York Times: Municipal Bond Market Shudders