Civic Insights with David Billings
Are Counties and Cities Businesses? Yes and No.
As we enter the final stretch of the state and county campaign season, a recurring question has surfaced:Are counties and cities businesses?
What Is a Business?
Think about the business down the street, the hardware store, the local coffee shop, the local baker or our favorite grocery, BBQ place, or clothing store. It opens its doors because someone believes they can provide a product or service people will willingly pay for. If customers stop showing up, the business adapts, downsizes, or closes. That’s the risk. That’s the deal.
A business invests its own capital, manages costs, and measures success by whether revenues exceed expenses. It decides what to offer, what to cut, and when to walk away. If the numbers no longer work, it can change course or exit entirely.
What Is Local Government?
Now think about our cities or county. It doesn’t open its doors because demand appears, and it can’t close them when times get tough. Local government exists because the state creates it and assigns its responsibilities that must be carried out whether the budget is tight or not.
Cities and counties don’t get to opt out of public safety, shut down roads, or suspend water or trash pickup services because revenues dip. They provide police, fire protection, EMS, emergency management, infrastructure, and basic services not because they are profitable, but because communities cannot function without them. Elected officials are not answering to shareholders they are accountable to voters and bound by law.
When people say government should be “run like a business,” they usually mean something sensible: spend wisely, plan ahead, don’t waste money, and be accountable to it’s citizens and the state for results. Those are good instincts, and they are exactly what taxpayers should expect from local leaders.
But the comparison only goes so far. The moment you look at what happens when money runs short, the difference becomes obvious. A business tightens its belt, changes direction, or closes its doors. A city or county doesn’t have that option. The doors stay open. The patrol cars still roll. The water still must flow.
That reality is where the business analogy breaks down and where the real distinction comes into focus.
The Key Difference
Imagine a business and a city facing the same problem: revenues are down.
The business gathers its leadership team, cuts expenses, delays investments, and, if necessary, shuts its doors. That may be painful, but it’s how the private sector survives. The business answers to owners and shareholders, and its purpose is to clearly generate profit and protect capital.
Now imagine a city in the same position. The city doesn’t get to shut its doors. Police still respond to calls. Firefighters still roll out when alarms sound.
Roads still must be maintained, water must keep flowing, and emergency services cannot pause until revenues improve. The city answers not to shareholders, but to residents and it operates under legal mandates, not market choice.
That is the fundamental difference. A business exists to create profit. Local government exists to provide essential services that protect public health, safety, and welfare services that cannot be deferred, outsourced, or abandoned when times get tough.
If you want to stretch the analogy, you could call local government a high-capital, quasi-business. But it is one without a profit motive, without the ability to exit the market, and without the option to stop serving the public when the numbers don’t work.
Let’s Look Deeper
Picture a growing Texas town. New families move in, rooftops go up, traffic increases, and expectations rise. Residents don’t ask whether the city feels like providing services, they assume the basics will be there. Roads will be paved. Water will run. Sewers will work. Police and fire will show up when called.
That expectation isn’t accidental. Under Texas law, cities exist for one primary reason: to deliver these core services. The Texas Local Government Code doesn’t treat them as optional or discretionary. They are obligations built into the very reason cities are allowed to exist.
Good local leaders understand this reality. They run their cities with a business-minded approach watching costs, planning ahead, managing debt responsibly, and setting tax rates that reflect where the city is in its growth cycle. Efficiency and fiscal discipline matter, especially to taxpayers.
But here’s the difference: unlike a business, a city cannot decide to stop offering essential services because margins are thin or priorities shift. A city cannot “exit the market” for public safety, infrastructure, or utilities. Those responsibilities are permanent, mandatory, and non-negotiable.
That is what makes local government fundamentally different and why the business analogy, while useful, has hard limits.
How do we spend our money?
Look at how a city actually spends its money, and the picture becomes clear very quickly. Start with public safety. In city after city, nearly half of every municipal dollar is already committed to police, fire, and emergency services before a single road is paved or a utility line is repaired.
Now widen the lens. When you add in basic city operations the staff who keep water flowing, bills processed, streets maintained, and codes enforced those core functions consume most of the budget. In communities like Fate, McLendon-Chisholm, Rockwall, and Heath, public safety and city operations together routinely account for three-quarters to nearly all municipal spending.
What little remains is not a pile of discretionary cash. It is a narrow margin. And any attempt to make deep cuts quickly runs into a hard truth: reducing spending almost always means reducing essential services Texans rely on every day.
This underscores a simple reality:
Local governments are fundamentally service-delivery organizations, not discretionary spending entities.
The Bottom Line
You can and should run local government with a business mindset. Taxpayers expect discipline, planning, and accountability, and they are right to demand it. Good mayors and city councils watch every dollar, plan for the long term, and make tough decisions just like any responsible manager would.
But local government is not a business. It is created by law, not the marketplace. It carries heavy, unavoidable capital costs police stations, fire trucks, water plants, roads and it operates without a profit motive. When budgets tighten, a city cannot shut down public safety, turn off the water, or close the doors and walk away. The obligations remain, because the community depends on them.
So, if the comparison helps, call local government a quasi-business. But let’s be clear: it is a non-profit public service institution, accountable to voters rather than shareholders, bound by statute rather than market choice and it will never be, and should never be, a for-profit enterprise.
About the Author
David Billings, former Mayor of Fate, has served the community for over a decade. A longtime business leader in the telecommunication industry, Navy veteran, and resident of Rockwall County, he brings both professional and civic experience to his writing on government, budgeting, and local economics. He is a graduate of Leadership Rockwall, North Texas Commission Leadership Program, active in several Rockwall County non-profits boards, and the American Legion.
He is passionate about civic involvement in local government, maintaining transparent governance and thoughtful strategic planning to preserve a bright future for the regions.
