Out of Control Policy Blog

Milwaukee County Board Chooses Tax Hikes Over Privatization

As I've written recently, the Milwaukee County Board is where good privatization ideas go to die—in particular those proposed by County Executive Scott Walker, who deserves credit for his tenacity in trying. It's happened yet again, as the Board has just opted for higher taxes to avoid privatization of public functions. Per the Milwaukee Journal-Sentinel:

The Milwaukee County Board adopted a precariously balanced 2010 budget early Tuesday that sets aside nearly all of County Executive Scott Walker's privatization efforts, ditches a proposed "wheel tax" and raises the property tax levy 3.8%, or nearly $10 million, to $267 million.

The budget approved by the board included a set of employee concessions with a much lower price tag than those Walker had wanted. Like Walker's, the ones the board approved have not yet been bargained with unions. [...]

After nearly four hours of closed-door negotiations Monday night, supervisors reversed an earlier decision and agreed to accept the privatization of 15 county mainframe computer technicians, to tap into an unemployment compensation reserve fund and to reject a bus rapid transit plan that Walker wanted. [...]

The board voted to reject the outsourcing of housekeeping and security jobs at the courthouse complex and other county buildings. Supervisors also turned back Walker’s proposed outsourcing of 25 airport firefighter jobs.

Together, those moves would add about $5 million to Walker's budget, which counted on privatization to help freeze the property tax levy for 2010 at this year's $257 million.

There were some minor, potential bright spots, however. First, the Board agreed to study health savings accounts and a potential shift from a defined-benefit to a 401(k)-style defined-contribution pension system for new employees. If these policies were implemented, the County would at least stop digging the entitlement hole deeper. Second, the Board agreed to study Walker's proposal to privatize the operations and management of the County zoo.

On the zoo privatization front, hopefully County Board members will see this excellent piece by Detroit Free-Press columnist Tom Walsh on how the private sector rescued the Detroit Zoo under an arrangement similar to that which Walker is proposing (and which Dallas has just begun to implement):

For a telling Detroit example of how a public-private partnership can save and improve a regional asset that government can no longer afford, look no further than where the wild things are. [...]

The Detroit Zoo's record of growing attendance while controlling costs and boosting visitor satisfaction -- all during a horrible economic time -- is remarkable.

This didn't happen easily. When the city struck a deal in 2006 to turn operation of the zoo over to the Detroit Zoological Society, it came after the usual squeals of protest from some in Detroit who didn't want to surrender control of a so-called city-owned jewel. [...]

The city still owns the assets, but the nonprofit Zoological Society runs operations, and much of the budget comes from the regional tax.[...]

On the cost side, the biggest savings was switching employee retirement plans from defined-benefit pensions to contributory 401(k) plans, as many private companies have done. Kagan said benefit costs are now about 29% of salaries, down from 70% when the workers were City of Detroit employees.

» Reason Foundation's Annual Privatization Report 2009
» Reason Foundation's Privatization Research and Commentary

Leonard Gilroy is Director of Government Reform


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