Mayor Giuliani is looking to other cities for advice on how to make privatization work. Indianapolis Mayor Stephen Goldsmith has flown to New York at least twice to discuss his techniques with Giuliani.

Goldsmith’s main strategy is allowing private companies to bid competitively against city agencies for service contracts. Private firms now wash windows at municipal buildings, treat sewage, microfilm documents, and count coins from parking meters. This strategy has cut the number of non-police public employees in Indianapolis by nearly one-fourth, from 2,700 to 2,100. At the same time, Goldsmith has managed to avoid a state of war with his public employee unions. When he put street repair work out for public bids, he provided the city’s own repair unit with a consultant who helped the municipal employees devise a labor-efficient system that resulted in their winning the contract.

Philadelphia follows a similar strategy, as Linda Morrison, former director of Mayor Edward Rendell’s Competitive Contracting Committee, explained at a recent City Journal forum. “The managers and the unions sit on the same side of the table, and they bid against the private contractors to keep the work in-house,” she said. “What happens at these meetings is truly miraculous. Seemingly insurmountable, long-standing obstacles . . . suddenly start flying out the window.”

Strategies like these will be particularly important to Giuliani, who is likely to face strong resistance to his privatization efforts. The New York City Council voted 43 to 8 to hold hearings within 30 days on any privatization contract over $100,000. These hearings would give municipal labor unions a public forum to complain; Giuliani says they will deprive him of flexibility in labor negotiations. In June, the council overrode Giuliani’s veto of the bill.


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