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For local governments, providing local services involves three levels of policy decisions. First, the local governing body must determine whether or not it will provide a given service. Second, if the service is to be provided, a decision must be made setting the level at which the service will be provided. Third, policy makers must select the appropriate means through which the service will be provided or delivered to residents. All three levels of decisions have an impact on the budget.

Local governments can approach how services are provided to residents in different ways. Many local governments decide to simply provide a needed service themselves, usually by a government employee or department. Other local governments decide to provide a service, but try to limit or reduce demand for the service through educational programs and use of their regulatory and taxing powers. When it is appropriate for a particular service, some governments provide the service and charge a fee, which recovers some or all of the cost, and may also help reduce demand for, or excessive use of, the service.

More and more, local governments are cooperating with neighboring local governments to provide services. Some do so with one or more other governments in a jointly owned and operated facility. Others contract with a nearby local government to provide services for their residents. To deliver some services to residents in areas smaller than the entire jurisdiction of the local government, local officials have encouraged and approved the formation of special taxing districts, such as utility, sanitary, and lake management districts. A few local governments have explored consolidation with another local government to form a single local government providing services.

Not all approaches involve cooperating with other governments. Public/private partnerships and privatization have become increasingly popular in recent years. Local governments may involve the private sector in providing services in a variety of ways, including contracts with private companies, franchises, vouchers, and complete turnover to the market. Finally, local governments sometimes transfer the delivery of services to others, such as another (usually larger) government, volunteers, or residents themselves. The following table lists many of the alternative approaches and options local governments can use in delivering services.


  1. Elimination of service
  2. Reduction of demand
  3. Regulatory and taxing authority
  4. Intergovernmental transfer
  5. Local government service
  6. Government vending
  7. Joint production
  8. Intergovernmental contract
  9. Grants and subsidies
  10. Special service district
  11. Consolidation
  12. Cooperative
  13. Joint public/private activity
  14. Privatization
  15. Vouchers
  16. Market
  17. Franchise
  18. Volunteers
  19. Self-help

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