Group says city could save millions by privatizing services

Colorado Springs could trim $135 million a year from its budget by hiring private companies to repave streets, mow grass in parks and plow snow - work currently done by city workers using city equipment, a group of contractors told an advisory committee Tuesday.

"Everything will start to diminish," said Paul Kleinschmidt with Rocky Mountain Premix, who helped form Citizens Coalition for Limited Government, a group of about 40 contractors.

Speaking to the City Council-appointed Sustainable Funding Committee, Kleinschmidt urged the panel to consider recommending the council scale back over five years construction work that could be done by private businesses.

The committee is charged with recommending how to deal with a projected $23 million shortfall next year and funding city services in the long term.
According to Kleinschmidt, the city and local businesses could benefit from privatization for the following reasons:

• When the city buys equipment, it doesn't pay sales taxes. If contractors gear up to handle city work by buying big-ticket items such as graders and backhoes, the city will collect sales or use tax on those purchases.

• The city could reap a windfall by selling some of the 1,400 pieces of equipment valued at $170 million, more than the equipment owned by the city and county of Los Angeles, Kleinschmidt said, citing trade journal data. That money could earn interest to be applied toward city expenses.

According to an equipment list provided to Kleinschmidt by the city, the Stormwater Enterprise, formed in 2005, owns 63 pieces of equipment, while 35 more are assigned to the Rural Transportation Authority. Streets has roughly 400 pieces of equipment.

Many sit idle at the city's five work centers because they're not needed much of the time, he said.

• By shifting public works contracts to the private sector, the city could focus on police and fire services, its core responsibility.

• Contractors are held to warranty periods when they build city roads and facilities; city crews are not.

• Although he cited annual savings of $135 million in jobs and equipment costs, Kleinschmidt didn't estimate how much the work would cost in private contracts.

"We have allowed the city to grow, as far as doing the business of business instead of governing," Kleinschmidt said. "It has become larger, larger, larger and competes with what we do."

City officials have previously argued against privatizing, citing a 2003 in-house study that showed the city's pavement overlay operation cost taxpayers less than contractors' charges.

Some committee members questioned whether contractors were cheaper, and Parks

Director Paul Butcher said contracting for mowing and maintenance didn't work out in the past because the performance fell short.

But others are open to the idea.

Committee member Doug Stimple, with Classic Homes, said hiring contractors isn't a "wholesale abdication of our responsibility" because the city would still employ people to provide oversight.

"At the end of the day, it might be more fiscally responsible" to privatize, Stimple said.

Committee member Kevin Walker said although outsourcing raises lots of questions, he supports giving it a shot. "We ought to try it," he said.

The Sustainable Funding Committee is due to make recommendations to the council this year. Several council members have expressed interest in contracting a greater amount of streets, stormwater and parks work.

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Contact the writer: 636-0238 or pam.zubeck@gazette.com