CITY BOOSTERS

Stephan Fantauzzo, head of Indiana's public-employee union, has seen a lot over the years, but nothing beats the day his auto mechanics came to him and said they didn't want their raises. Indianapolis had just put out to competitive bidding the business of repairing city vehicles, and that meant his workers had to bid against private companies to keep their jobs. Fantauzzo's workers were worried that they would be underbid. So they gave up their pay raises--and narrowly won the contract. The competition has brought a new efficiency to the operation: costs are down 29%, turn-around time on repairs has improved markedly, and customer complaints have fallen more than 90%. At the same time, the workers have more than made up for their lost raises, averaging 5% salary hikes in each of the past four years, well above the city average. Says a once skeptical Fantauzzo: "We found a way to make this a win-win situation."

Auto repair is only one of more than 70 municipal operations Indianapolis' Republican Mayor Stephen Goldsmith, the nation's leading exponent of "competing out," has spun off in five years in office. The city's wastewater-treatment plants are being run by a private company, at a projected savings of $65 million over five years. Indianapolis International Airport is now run by the British Airport Authority, which promises it will save $32 million over 10 years. Goldsmith even managed to privatize Indianapolis' 2,200-job Naval Air Warfare Center, which had landed on the Pentagon's base-closing list. With the Federal Government's permission, he brought in Hughes Technical Services to take over the operation and sell products and services back to the Navy.

Indianapolis is hardly alone among cities that have been quietly putting the fashionable buzz words "reinventing government" into practice. Municipal government has long been regarded as the great back-water of American democracy: a world of political patronage and special-interest jockeying in which policy discussions rarely move beyond synchronizing traffic lights. But a new breed of activist mayors, recently hailed by the New Republic as "the Pride of the Cities," has been turning city halls into hothouses of governmental innovation. They are challenging entrenched interests and butting heads with traditional allies in the pursuit of real reform: overhauling the school system in Chicago, reshaping labor-management relations in Philadelphia and privatizing municipal services all over.

The driving force behind this fresh approach to urban government is a handful of "new pragmatist" mayors--Indianapolis' Goldsmith, Cleveland's Michael White, Philadelphia's Edward Rendell, Milwaukee's John Norquist, Chicago's Richard M. Daley and to some extent Los Angeles' Robert Riordan and New York City's Rudolph Giuliani--who actively collaborate and compare notes on how to make cities work. Goldsmith visits Giuliani every few months to talk shop; Rendell and Goldsmith bounce ideas off each other at frequent joint speaking appearances. And good practices, big or small, travel fast. "You learn a lot from each other," says Republican Riordan, who used Indianapolis-style competing out to award cleanup contracts after the 1994 Northridge, Calif., earthquake. Goldsmith is using a silicone-based antigraffiti sealant he learned about from Daley. Says White: "If there's anything that binds us, it's simply that we pride ourselves on being result-oriented."