This research examines the extent to which neoliberal reforms have reshaped local government in Turkey. Two middle-sized provincial municipalities have been chosen in order to offer a comparative perspective. An important element of neoliberal reforms is the privatization of municipal services such as garbage collection and transportation through contracting out. This contribution describes the changes in the way municipal services are provided and how these changes reshape local power structures and labour relations, and public accountability in particular. It concludes that the two municipalities acquired new institutional capacities to shape their own developmental pathways but still to a large extent the paradigms within which the municipalities operate are being determined and constrained by the rules and regulations set out by the central government. Furthermore, the reforms encourage a shift of municipal affairs from public to private law and lead to bypassing of traditional checks and balances.