I think it is a good idea, basically, but may need some refinement. For instance, instead of paying $12,000 for a micro-chip scanner, it would be wiser to contract with a local vet to scan each animal. When the animal is picked up, it could be taken to the vet immediately and scanned before it is even housed. Pay the vet either a set monthly fee for being available(say $200 a month) or a fee for each individual dog brought in (say $20 per dog) . See how the whole plan works out and how many dogs would actually be housed by the city before investing a sum like that in a piece of equipment that is already readily available in the area.
If the animal is scanned immediately after pick-up, it can be returned to its owner immediately, thus negating even staying at Easton's shelter for a moment.

My bad, I missed the fact that the cost of the scanner was only part of what the $12,000 would be used for (so much for skimming). But I still think that buying a scanner is an unecessary expense, at least initially. The dogs should probably be vetted anyway before they are put with other dogs to make sure they don't have any contagious diseases.

Animal Control is a City responsibility. It is a smart idea for Easton to take charge of the health and welfare of its animal population rather than outsourcing it.