Out of Control Policy Blog

Friday Privatization News Highlights (7/1/2011 edition)

News articles on some of the more interesting developments on the state and local privatization front this week include:

  • "Kasich signs historic budget" (Columbus Dispatch): Yesterday, Ohio Gov. John Kasich signed into law a $56 billion budget that includes a number of reforms, including authorization for the state to pursue the privatization of five Ohio prisons and a long-term lease of the Ohio Turnpike. More details here. A proposal to privatize the management of the state lottery was pulled from the budget earlier in the week in legislative negotiations.
  • "Governor says he'll renew push for ABC privatization" (Richmond Times-Dispatch): Virginia Gov. Bob McDonnell is signaling a renewed push to privatize the Commonwealth's antiquated state liquor monopoly, but no details yet on whether this latest push will focus on retail sales, the wholesale distribution enterprise, or both. My most recent writings on ABC privatization are here, here and here, and don't miss our 2010 Reason.tv video featuring Gov. McDonnell on the subject.
  • "Does the Scott administration want to privatize camping in state parks?" (Florida Independent): The Florida Department of Environmental Protection is reportedly considering tapping public-private partnerships (PPPs) with recreation management firms to expand camping and RV facilities in over 50 state parks. While the news is predictably being met with derision by those lacking a clue about how parks PPPs work in real life, the concept makes a ton of sense, as explained here, here and here. We debunked the "privately operated parks are scary" myth in our October 2010 Reason.tv video here as well. Speaking to the Independent's assertion that this is plan is a "bold one," I feel compelled to point out that the U.S. Forest Service has used PPP park concessions for over 25 years extensively throughout its system, and today over half of the agency's recreation sites across the country (totalling hundreds) are currently operated by private recreation management companies operating under performance-based concession contracts that protect park character, prevent development and address all sorts of other public interest issues. So really, Florida is just considering taking a page from the U.S. Forest Service, which operates the largest system of recreation areas in the country, if not the world. States need to catch up with the feds on this one, and it sounds like Florida may be taking this opportunity seriously, which is a very good thing if you're a recreation buff interested in keeping state parks open on a sustainable basis. Ironically, the U.S. Forest Service uses PPP concessions to manage over a dozen recreation facilities within three of its forest areas in Florida (including the popular Juniper Springs canoe run and nearby recreation and wilderness areas), so this approach is already being used in the Sunshine State today to deliver high-quality recreation opportunities. Go check out those facilities and see for yourself, and you'll see that fears of "commercialization" or "selling parks" are utterly bogus.
  • "Puerto Rico Advances In Airport Sell-Off Plans" (Reuters): Airlines serving San Juan's Luis Munoz Marin Airport have given Puerto Rico the go-ahead to pursue a long-term lease of the airport, a critical hurdle under the federal airport privatization pilot program. Governor Luis Fortuno told local business leaders this week that the U.S. commonwealth plans to have a public-private partnership (PPP) in place to operate the airport within a year. This announcement comes on the heels of last week's news that Puerto Rico had selected a winning bidder—a consortium including Abertis and Goldman Sachs—for a 40-year, $1+ billion concession to operate two toll roads. So far, Puerto Rico's robust PPP program has been on a roll, and it should serve as a model for other states in terms of scope and process. See Gov. Fortuno discuss the PPP program and his other government streamlining initiatives in this Reason.tv video.
  • "Malloy Rebuffed By Legislators On Privatization Proposal" (Hartford Courant): Connecticut legislative leaders have rejected a proposal by Gov. Dannel Malloy to temporarily waive a restrictive state law on privatization as part of a strategy to close a looming $1.6 billion, two-year budget deficit. Earlier in the week, the state's fiscal challenges loomed large when Moody's issued a negative outlook on the state's bonds. More details here and here.
  • "Outsourcing golf course maintenance could be just first step for Sacramento" (Sacramento Bee): The Bee explores the evolving political dynamics surrounding municipal contracting in Sacramento, where there appears to be growing interest in privatization on the heels of a golf course maintenance outsourcing initiative expected to save the city $500,000 per year.
  • "Santa Paula council OKs new city budget" (Ventura County Star): Sacramento certainly isn't the only Golden State city to tap privatization and outsourcing recently. In Santa Paula, privatization in solid waste and water has helped the city shore up its budget, and according to the city's financial consultant, the privatization moves "likely saved the city from financial disaster."
  • "Cap Metro labor bill headed to governor" (Austin American-Statesman): The Texas legislature has sent a bill to Gov. Rick Perry that would require Austin-area transit provider Capital Metro to either privatize all of its bus routes or institute significant pay cuts for staff as it seeks to dig out from under its long-standing financial woes.
  • "Money to flow from smartphones to parking meters" (Indianapolis Star): Looks like Indianapolis drivers will soon see a major benefit from the city's 2010 lease of its downtown parking meter system. Forget bags of coins and frantic jogs to feed the meter—not only will the new meters the concessionaire is installing take credit cards, but they're going a step further by rolling out a smartphone app that will allow remote, electronic meter payments. Sounds like the Starbucks iPhone app for parking meters, and it offers a good illustration of some of the underappreciated, intangible benefits that can flow to users in these sorts of municipal asset leases.
  • "Frederick County to look for outsourcing help" (Frederick News Post): Following up on news reported last week on a consultant report identifying major potential savings through privatization in Frederick County, Maryland, county officials appear poised to begin soliciting proposals from private bidders in the near term for various services. This seems like a sensible move, because it's healthy for governments to get as many bids as possible for the delivery of public services as a routine effort, as it offers useful, external budget validation and a check on whether internal government costs are in line—whether or not services are ultimately contracted out in the end.
  • "City Rejects No Kill Louisville Bid for Animal Services" (WFPL News): Animal rights activists in Louisville, Kentucky are steaming after Mayor Greg Fischer rejected a bid from the local nonprofit No Kill Louisville to take over operations of the beleaguered Louisville Metro Animal Services, which has been heavily criticized for poor facilities and high euthanasia rates. Instead, the city plans to backtrack on privatization and instead re-open a previously stalled search to find a new executive director for the agency. Color me skeptical that this effort will result in the intended turnaround.

For more on privatization, see Reason Foundation's privatization research archive.

Leonard Gilroy is Director of Government Reform


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