Why do city Governments hire consultants to tell them how to save money?

Question

Why do city Governments hire consultants to tell them how to save money?

Answer 1

Because it is the people's money and you need a third party view on how to use it.

Answer 2

Consultants can either be invaluable or a waste of time.  They are often tapped to get a second professional eye on something, to get ideas from outside the box.

Answer 3

The real question is why are they hiring outside people at all? Don't they usually have a fleet of very well paid accountants!?

I think hiring a consultant is the easiest way to say "Look we are saving money!" even though they are paying someone to tell them things they should already know. It's mostly political.

Answer 4

The maxim that you have to spend money to make money may apply in a way to saving money.  If a consultant can recommend a cost-saving course of action that would not have been apparent to the city officials, the city's expenses will be lower if the total savings exceed the amount paid to the consultant.

Firms occassionally engage in such activity.  If a firm is unable to save more than it spends, it suffers losses.  The more profitable firms gain more influence on the market while the ones that squander money (on worthless consultants or whatever) may eventually go out of business.  The market is self-correcting in this way.

The self-correction mechanism for city governments is not as strong since they can, to a point, raise taxes or otherwise use law enforcement powers to cover their mistakes.  They can still go bankrupt, and city officials are often held accountable for their mistakes.  At the federal level, however, these mechanisms are all but non-existant.  The federal government is only corrected at substantial cost to society.

Answer 5

The "consultant" is a good scapegoat for the government if their plans don't work out so well. I'm sure the government already knows what it wants to do but doesn't want to get the blame for it.