Is privatization related to municipal fiscal health? Are privatization levels higher in fiscally healthy or fiscally stressed cities? Where are cities that use large amounts of privatization located? In this inquiry the privatization levels of mid‐sized cities are explained by examining their fiscal and demographic characteristics. The findings suggest that cities with high privatization levels tend to be fiscally healthy and located in suburban areas. The results also suggest that fiscal stress, tax burden, and the magnitude of debt are lower in cities that use large amounts of privatizatio