Privatization makes more sense than bureaucracy

July 30, 2012
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Grand Rapids Business Journal this week begins ongoing reporting on the details of public sector restructuring and the resulting consolidations and inter-governmental cooperation agreements.

The city of Grand Rapids is not new to such opportunities. In fact, it has more than a five-year track record of cooperative opportunities, from the abandoned Steelcase manufacturing site located within three local governmental boundaries to more recent service agreements with Wyoming and an income tax processing partnership with Lansing and Flint.

With some of the state’s most famous collaborations accomplished, the city agreed last week to serve as the lead in a completely new “state-empowered” entity, and that is enough to give one pause. The Business Journal views this new entity critically.

State Treasurer Andy Dillon came to town to encourage Grand Rapids to sign an agreement with Livonia to share services, the first of which will include “cloud-based” accounting and payroll services and management of health care benefits. The city signed the agreement; Livonia signed it last week.

Unanswered questions include why such functions are not simply privatized, rather than layered into a new bureaucracy.

Dillon told Grand Rapids commissioners the new Municipal Services Authority is the result of the common, major problems he has witnessed in troubled cities across the state in which the state has intervened for emergency financial management.

It is not a shock that government bureaucrats answer problems with more government bureaucracies. It is surprising that a unique “pop-up” entity — controlled by the state — was so readily given blanket approval — an approval that then creates an entire new level of bureaucracy and a new generation of bureaubrats, or as Dillon said, “this idea creates a virtual city.”

The structure was established in this manner: Both cities will appoint two members to the governing board; Gov. Rick Snyder can appoint two members for each member the cities assign. The initial board can have up to 12 members. However, an executive committee will manage the MSA. The committee will consist of five members of the governing board, with one coming from each city and three coming from the governor’s appointments.

Grand Rapids will make its appointments known Aug. 14. (See the story on page 1.)

The city assuredly sees this as an opportunity to capture new state funds, which Snyder set aside for such agreements — a move that answered the continued state theft of revenue sharing from governments across Michigan.

Is it a carrot and stick, or reshaping representative government to the authority of the state — i.e. state control?

Assuredly, he who has the gold is making the rules.

The beginning of the new bureaucracy, the Municipal Services Authority, has begun simply enough and with enthusiastic approval from at least two cash-starved cities.

Be warned.

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