Reason Foundation

New Wisconsin Recall Poll: Reason-Rupe Finds Broad Support for Pension, Health Care Reforms

Posted on May 24, 2012, 8:00am | Emily Ekins

Gov. Scott Walker leads Milwaukee Mayor Tom Barrett 50-42 among those likely to vote in Wisconsin’s June 5 recall election, according to a new Reason-Rupe poll of 708 Wisconsin adults on cell phones and landlines.

In the presidential race, 49 percent of all adults surveyed approve of the job President Obama is doing and 45 percent disapprove. President Obama leads Mitt Romney 46-36 in Wisconsin, with 6 percent selecting the Libertarian Party’s Gary Johnson. Obama’s margin over Romney shrinks to 45-41 among those likely to vote in June’s recall election, with Johnson taking what would be a crucial 5 percent of the vote.

The Reason-Rupe poll finds voters overwhelmingly support many of the key changes Gov. Walker and the legislature implemented on public sector pensions and health care last year. Reason-Rupe finds 72 percent favor the change requiring public sector workers to increase their pension contributions from less than 1 percent to 6 percent of their salaries. And 71 percent favor making government employees pay 12 percent of their own health care premiums instead of the previous 6 percent.

Taxpayers actually wish state lawmakers had cast an even larger net with their reforms. Police and firefighters were exempted from the pension and health care adjustments but 57 percent of taxpayers say they should not have been.

The public supports asking government workers to pick up more of the tab for their own benefits because 65 percent say public sector workers receive better pension and health care benefits than private sector workers, 22 percent say benefit levels are about the same, and just 7 percent believe private sector benefits are better than those in the public sector.

When asked what state and local officials should do if pensions and health benefits are underfunded, 74 percent favor requiring government employees to pay more for their own health care and retirement benefits. In sharp contrast, 75 percent oppose cutting funding for programs like education and 74 percent oppose raising taxes to help fund government worker benefits.

To deal with rising retirement costs, 69 percent favor shifting future state employees, those who haven’t been hired or promised pensions yet, to 401(k)-style retirement plans instead of the current defined-benefit plans.

If state and local governments have to reduce spending, voters were asked what should be cut first: 38 percent say public employee pension benefits, 29 percent believe prison and court cuts should be made first, 17 percent would reduce funding for roads and infrastructure, 5 percent chose education, and 4 percent would target health care spending.

Government employee unions are viewed favorably by 35 percent of those surveyed and unfavorably by 31 percent. Voters remain split on limiting the collective bargaining power of public sector unions, with 47 percent in favor of, and 46 percent opposed to, restricting unions’ ability to negotiate things like health care and pension benefits.

The Reason-Rupe poll finds significant differences in attitudes between public and private sector employees. For example, 65 percent of government employees have a favorable view of public employee unions and just 11 percent view unions unfavorably. In contrast, only 27 percent of private sector employees have favorable opinions of public employee unions, while 37 percent view them unfavorably.

And while 72 percent of all respondents favor the law requiring public sector workers to increase their pension contributions, only 48 percent of government employees favor the change, while 80 percent of private sector employees favor it.

The complete Reason-Rupe survey is online here (pdf).

This Reason-Rupe poll, conducted May 14-18, 2012 by ORC International, surveyed a random sample of 708 Wisconsin adults on cell phones and landlines. The results have a margin of error of plus or minus 3.7 percentage points. The poll includes 609 likely voters who are registered and said they are certain or likely to vote in the June 5 recall election.

This is the latest in a series of Reason-Rupe public opinion surveys dedicated to exploring what Americans really think about government and major issues. This Reason Foundation project is made possible thanks to the generous support of the Arthur N. Rupe Foundation.

New York City Launches Parking Meter Privatization Initiative

Posted on May 24, 2012, 7:00am | Leonard Gilroy

Last week, the Bloomberg administration in New York City announced plans to issue a request for qualifications from private bidders interested in a potential lease of the city's parking meter system, following in the footsteps of Indianapolis and Chicago, which have inked similar deals in recent years. This is a sensible move for NYC, as privatization can not only unlock value trapped in parking assets, but it can also provide a powerful means of deploying new, cutting-edge parking technology at a time when fiscal conditions prevent the city from making such investments on its own.

As Ted Mann wrote in The Wall Street Journal last week:

Officials said they are motivated in part by a belief that a private company could help alleviate some of the well-known frustrations of parking in New York: circling block after block in a search for an empty spot or dashing out in the middle of dinner to feed a meter.

Although other cities have embraced more driver-friendly technologies, New York has been slow to catch up.

The city's 7,800 muni-meters represent only a slightly more modern approach—they accept credit and debit cards—than the 31,000 single-space meters that gobble coins in boroughs outside Manhattan.

With enough incentive, officials believe, an outside party could come up with innovations for the Internet age, such as a system to pay with a smartphone or a mobile app that would direct drivers to vacant spaces detected through sensors in the pavement.

In the Bronx, the city Department of Transportation is running a pilot program to test pavement sensors, including whether they will work in New York's climate. But that is a small test, and broadening that program, or one like it, to the entire city could be risky and expensive.

"The odds are higher that [private companies] will move with greater alacrity," Deputy Mayor Robert Steel said.

A deal also could offer potential savings for the city on labor costs, but officials said it is too soon to say what a contract might look like.

[…] New York City officials said they aren't looking for an upfront balloon payment and wouldn't strike a deal that relinquished control over the setting of parking-meter rates—a key source of friction in Chicago.

New York's meters brought in $149 million in revenue in the last fiscal year, a spokesman for the city DOT said. Parking tickets are handled separately from meter operations, and neither enforcement nor parking-ticket revenue would be included in any privatization deal, a city spokeswoman said.

"We're not looking to sell out the system, which some people have done and which I don't understand at all," Mr. Steel said. "Our process has been to consider locking in the current performance, and, if it makes sense, transferring the risk to a third party."

[…] If the city's request for qualifications reveals suitable bidders, a request for proposals would follow, likely several months from now.

More here from Noah Kazis at Streetsblog, as well as this follow-up article from Mann.

Notably, the Bloomberg administration has been emphatic that if a deal is ultimately reached, the city will retain controls over parking rates and parking violation enforcement. Some journalists have misconstrued this to imply that similar deals in Indianapolis and Chicago lacked those controls, but that is not the case.

For example, Chicago officials authorized a set schedule of rate increases for the first five years of the 75-year lease term, and then rates are allowed to adjust annually beyond that with a maximum cap (capped by inflation). However, city council approval is required for any rate increase after the first five years. So the private concessionaire cannot just change whatever rates it wants; rates are controlled either in the contract (first five years) or must be approved by the city council (remainder of lease term). The Indianapolis privatization has similar rate controls.

Earlier this week, my colleague Harris Kenny posted his parking asset privatization update extracted from Reason Foundation's recently released Annual Privatization Report 2011 (APR2011). The article offers an update on last year's news from the Chicago and Indianapolis parking leases, and it also provides an overview of other governments' efforts in 2011 to explore similar parking transactions, including Los Angeles, Sacramento, New Jersey Transit and Pittsburgh.

Momentum appears to be continuing in 2012. In addition to New York CIty, some of the more notable developments thus far in 2012 include:

Ohio State University: As Harris noted in APR2011, last year Ohio State University officials released a request for qualifications—and approved seven potential bidders for—a potential long-term lease of its parking system, which would be a first-of-its-kind asset monetization by a public university. Last last month, OSU took the next step, issuing a request for proposals seeking at least $375 million in an upfront payment from a private operator in return for a 30-50 year concession. If a deal is finalized, then the school would put the entire upfront payment into its long-term investment pool to support the university's long term academic mission. Bids are due by the end of this month. More details are available on the university's parking proposal homepage. Predictably, students and professors don't like it.

Sacramento, CA: As Harris and I wrote back in March, officials in Sacramento had been pursuing a lease of its downtown parking meters and garages in order to help finance a brand new downtown NBA arena to try to keep the Sacramento Kings from leaving town. As we wrote, parking privatization makes sense on its own, but doing so in order to subsidize a boondoggle arena and its wealthy patrons does not. Luckily for Sacramento taxpayers, this arena deal crashed and burned last month, when the city and the Kings' owners reached an irreconcilable impasse in their larger negotiations to finance the arena. More details here. Interestingly, one media outlet reported recently that city staff have left open the possibility of a standalone parking asset lease to generate revenues for other capital assets.

Harrisburg, PA: The state receiver charged with paying down Harrisburg's staggering debt and closing structural budget deficits is pursuing several potential sales and long-term leases of city assets as part of the city's fiscal recovery plan, including a long-term lease to operate the city's system of parking garages, meters and surface lots. Back in March, the city's receiver shortlisted 12 of 18 potential bidders for a long-term lease of the city's parking assets, and last month nine of those bidders submitted responses to a request for qualifications. The receiver is expected to make a final selection by June. The state's Commonwealth Court must approve any final deal, and officials expect that the Court could make its determinations as early as late June.

Wilkes Barre, PA: Last Friday, the Wilkes-Barre City Parking Authority released a request for qualifications for a 30-year or 50-year lease of its 2,273 garage and surface lot spaces and 800 parking meters. It has also hired a parking consultant to help assess the potential value of its parking assets and prepare the RFQ. City officials are seeking an upfront payment of at least $20 million, and responses are due back by June 8, 2012. The RFQ is available here.

Reason Foundation has a lot of research available in its archive on the privatization of parking assets. For more, see here.

NJ Legislature Exploring Decriminalizing Marijuana

Posted on May 21, 2012, 11:37am | Harris Kenny

Today the New Jersey Assembly Judiciary Committee is considering Assembly Bill Number 1465 (A1465), which would most notably decriminalize possession of 15 grams or less of marijuana, and impose a new range of civil penalties instead. Roseanne Scott, state director for the Drug Policy Alliance, told The Star-Ledger, "(this) the furthest a bill to decriminalize marijuana has ever gotten in the New Jersey Legislature." Specifically, the bill statement reads:

This bill would decriminalize possession of 15 grams or less of marijuana. A person who is found to possess 15 grams or less of marijuana would be subject to a $150 fine for a first violation, a $200 fine for a second violation, and a $500 fine for a third or subsequent violation…

In addition, any person who is 21 years of age or older who commits a third or subsequent violation would be referred to a drug education program approved by the Division of Mental Health and Addition Services in the Department of Human Services. A person who is less than 21 years of age at the time of the violation shall be referred to an approved drug education program following any violation. The person would be responsible for paying any costs associated with his participation in the program, consistent with his ability to pay. If the violation is committed by a person under the age of 18, the person would be referred to the Family Part of the Chancery Division of the Superior Court for an appropriate disposition.

A person who possesses drug paraphernalia for the personal use of 15 grams or less of marijuana would no longer have committed a criminal violation but would be subject to a $100 civil penalty.

Additionally, this bill would establish that it is no longer a disorderly persons offense to be under the influence of marijuana or to fail to voluntarily deliver 15 grams or less of marijuana to the nearest law enforcement officer. This bill would also eliminate the requirement that a person who operates a motor vehicle while in possession of 15 grams or less of marijuana must pay a $50 fine and forfeit the right to operate a motor vehicle for a period of two years.

The Commissioner of Human Services would adopt any rules and regulations necessary to effectuate the purposes of section 5 of this bill. This bill would not apply to persons who are in compliance with the “New Jersey Compassionate Use Medical Marijuana Act,” N.J.S.A.24:6I-1 et al.

A1465 will likely benefit from recent momentum on drug policy reform, and enjoys widespread support in its own right. For example, New Jersey policymakers recently approved medical marijuana for the first time.  A1465 was first introduced by Assemblymen Reed Gusciora (D-Mercer) and has bipartisan support from 15 Democrats and three Republicans. And last week The Star-Ledger editorial board weighed in on A1465 bluntly, concluding:

Treat pot the same way we do alcohol, with education and treatment. Not by calling the cops. What didn’t work for bootleggers won’t stop the stoners.

Despite the aforementioned support, A1465 faces an uncertain future. It’s not clear whether the bill will make it out of committee, let alone out of the legislature. And while Governor Chris Christie has signaled interest in criminal sentencing reform, his office has not publicly commented on this particular bill.

Drug policy and criminal sentencing reform continue to gain momentum in New Jersey, making A1465 a bill to watch.

Will Indiana, Pennsylvania Follow in Illinois' Footsteps on Lottery Privatization in 2012?

Posted on May 21, 2012, 10:00am | Leonard Gilroy

One of the more interesting developments last year in the world of privatization was Illinois' first-of-its-kind privatization of the operation of its lottery, covered in detail in Reason Foundation's Annual Privatization Report 2011 (lottery article link here; full report here). Illinois officials crafted the privatization initiative such that the private operator committed to increasing net lottery revenues to the state by an expected $1 billion over what the state had estimated under in-house operation over the next five years, with the new revenues dedicated to education and infrastructure.

The Annual Privatization Report 2011 article noted that Illinois' lottery deal caught the attention of policymakers in several other states in the second half of last year, and in just the last two months, two additional states have begun taking formal steps to evaluate the potential for similar transactions.

Last Wednesday, the Indiana State Lottery Commission announced a solicitation seeking firms interested in assuming operation of the Hoosier Lottery. As Leslie Weidenbener wrote last week in The Courier-Journal:

The state will take steps to hire a private company to help run the Hoosier Lottery in an effort to make more money from the games — a step already taken by Illinois and under consideration in Pennsylvania, New Jersey and other states as well.

The Indiana State Lottery Commission voted 3-0 Wednesday to seek information from companies that would be willing to “perform a broad scope of services” for the lottery. Then in September, the state plans to accept actual bids.

“Gov. Mitch Daniels has consistently challenged all of us to identify and implement changes that promote more effective and more efficient state government,” said Hoosier Lottery Executive Director Karl Browning in a statement the agency issued Wednesday afternoon. "The goal is to become more strategic in our business approach in an effort to increase revenue for the State of Indiana," he said.

[...] The Hoosier Lottery released what it called a “Request for Expression of Interest” on Wednesday, which lists areas of potential growth opportunities:

• Reconfiguring the current retail and distribution network, potentially increasing its scope and reach;
• Optimizing commission structure for retailers and other distributors;
• Optimizing the gaming experience within the legal parameters of the United States and the State of Indiana;
• Enhancing marketing activities;
• Marketing the Lottery to new, infrequent and lapsed players to increase the breadth of its customer base
• Implementing new technology platforms to enable more effective and efficient operations; and
• Making improvements to the supply-chain.

Similarly, last month Pennsylvania Gov. Tom Corbett announced that his administration had launched a similar process, testing the market for interest in a private management contract for that state's lottery. According to the Governor's press release:

Governor Tom Corbett today announced his administration is taking an innovative step that could increase future funding for a wide range of vital programs for older adults supported by the Pennsylvania Lottery.

The commonwealth has issued a Request for Qualifications to pursue a private management agreement for the Pennsylvania Lottery. Should the state decide to move forward with accepting bids, qualified private sector firms will compete to offer new ideas to maximize the Lottery’s performance and increase revenues that support programs serving older Pennsylvanians.

“The Pennsylvania Lottery is the nation’s one and only lottery that benefits older adults and that will not change,” Corbett said. “This initiative is simply part of my administration’s efforts to tap private sector innovation to make state government work more efficiently and effectively, which is precisely what taxpayers expect.

“Our state’s fast-growing population of older adults means time is not on our side, and we need to maximize funding for senior programs and services in a way that does not ask taxpayers to dig any deeper into their pockets,” Corbett added.

A private management organization may be better able to quickly adapt new technologies, develop new games and optimize retail outlet performance. It would be required to cover any initial shortfall to financial returns assured by any private management agreement.

In accordance with federal guidelines, the commonwealth would continue to own the Lottery – it would not be sold. A private management firm would be responsible for the Lottery’s operations, but the commonwealth would still conduct the Lottery and retain full rights to control, inspect and audit the Lottery.

[...] [State revenue secretary Dan] Meuser noted that over the last five years, Lottery net profits have grown an average of just 0.3 percent per year. In addition, the Lottery’s net revenue is projected to grow about 1 percent, on average, per year through fiscal year 2014- 15, which is not likely to keep pace with cost increases and demand for current programs.

These are encouraging developments in both states, as operating a lottery enterprise is not a core function of government in any semblance of the imagination. However, full privatization is not an option; any divestiture or long-term lease of lottery revenues would be prohibited under federal law according to the U.S. Department of Justice. So Illinois pioneered the next best thing: turning over lottery operations to a private consortium with deep operational expertise as a means to maximize marketing and retail performance, and thus maximize net revenues to the state. Why would anyone reasonably expect government agencies to manage such business functions better than...well, a real business?

And it's no free-for-all for the private sector, as the contract in Illinois (and presumably the next states to follow their lead) requires the operator to receive state approval of its business plan annually and submit to other public controls. As I wrote in APR2011:

Illinois Gov. Pat Quinn announced the winning bidder for a contract to take over the management of the state lottery in September 2010. Officials expect the move to generate $4.8 billion for the state over the next five years, a $1.1 billion increase over the revenues projected under state management. Under the terms of the 10-year contract, the winning bidder—Northstar Lottery Group, a partnership between GTECH, Scientific Games and Energy BBDO—will take over responsibility for lottery operations, management and marketing functions in exchange for a portion of revenues. The state will continue to exercise control and oversight over all significant business decisions, including the state approval of annual business plans and ability to access all vendor information regarding lottery operations.

The deal also ties the operator’s compensation to its performance at enhancing lottery revenues. Through a combination of an annual $15 million management fee and incentives for extra profits, Northstar stands to earn over $330 million over five years if it reaches state-determined revenue targets. However, the contract includes a 5% total net income cap on the potential profits for the contractor, as well as penalties paid to the state if the company fails to hit revenue targets. The contractor will retain all current lottery employees and has announced its intention to hire an additional 100 private sector employees.

Read the whole thing here, and see here for more fascinating tales from the voluminous Annual Privatization Report 2011.