Fiscal Conditions, Political Interests, and Service Outsourcing Decisions: The Case of Georgia Counties

The question why a government chooses a specific service delivery tool to provide public service to its citizenry is a central intellectual inquiry in public administration. This paper develops a framework to explain the production and sector choices of public services by political-economic environment, organizational capacity, service market condition, and nature of service. Using operation and financial data of Georgia county governments during 2000-2006, we apply the framework to analyze Georgia counties’ public service outsourcing decisions, focusing on the effects of fiscal condition and political interests. The logistic regression results show that the choice of external production is negatively associated with government’s revenue raising capacity, managerial capacity, and citizens’ political demand for local control yet positively associated with conservative ideology. The choice of private sector is positively correlated with conservative political interest, increase in discretionary financial resources, and the centrality of government’s position in local service provision market.