The Restructuring of Municipal Services: A Canada—United States Comparison

We examine how cities and towns provide services in the United States and Canada. Comparative analysis focuses on the role of the private sector in service delivery and the factors that affect city managers' decisions to contract out services. Study of the selection of the most effective form of service delivery is particularly instructive at the local level of government because that is where change occurred first and where most research has been focused. Research shows that Canadians have a more coordinated market economy, greater faith in government, and more communitarian values. Thus we hypothesize that Canadian municipalities will offer more services overall but fewer through the private sector than their American counterparts. We provide a comparative view of the forces that motivate city managers to change service-delivery modes. Our data come from the first survey of municipal service delivery in Canadian cities conducted in 2004. We replicated an earlier US survey conducted by the International Cities/Counties Management Association in 2002–03. Privatization plays an important role in the provision of municipal services in both countries. We found support for a view of a more pragmatic city manager than that envisioned in the public choice theory. City managers implement adjustment policies to facilitate restructuring; integrate community voices into the process to accommodate diverse views; and privatize only when contract-monitoring problems can be managed. As expected, Canadian municipalities provided more services than their American counterparts. Contrary to expectations, however, Canadian local governments had higher rates of privatized services and greater numbers of privatization plans. Because of the devolution of services by Canadian provinces to the cities without the necessary funding, it is conceivable that Canadian managers may have been under more pressure to restructure than their American counterparts. There was evidence, for example, that Ontario and Alberta, where pressures have been the highest during the Klein and Harris governments, had significantly higher privatization rates.