Out of Control Policy Blog

Friday Privatization News Highlights (7/22/2011 edition)

News articles on some of the more interesting developments on the privatization and public-private partnership (PPP) front over the last two weeks include:

Federal/International

  • "Republicans push to restore job competitions with private sector" (Federal Times): Over 20 House Republicans sent a letter to Appropriations Committee Chairman Harold Rogers last week requesting the reinstatement of public-private competitions under Circular A-76 in upcoming 2012 appropriation bills. Congress placed a moratorium on competitions under Circular A-76 in 2009.
  • "House appropriators encourage GPO privatization" (FierceGovernmentIT.com): A legislative appropriations bill (HR 2551) moving through the House directs the Government Accountability Office to prepare a feasibility study on transferring Government Printing Office (GPO) functions to other agencies and privatizing the GPO. A report accompanying the bill noted that GPO already contracts out over 90% of its annual print jobs and expressed "some concern about the future of the GPO as a viable printing operation for the Federal Government."
  • "Nine prisons put up for tender in mass privatisation programme (U.K.)" (The Guardian): Having already selected private operators for three U.K. prisons earlier this year, U.K. Justice Secretary Kenneth Clarke announced that nine more prisons will be put out to bid for private operation. According to the article, if officials ultimately decide to sign contracts for each facility, then over 20 of the country's 138 prisons (or roughly 15%) would be under private operation; there are 12 today, with four new privately-operated prisons in the pipeline.

State Government

  • "Corbett panel to look at selling state assets, privatizing services" (Pittsburgh Tribune-Review): Pennsylvania Gov. Tom Corbett plans to launch a new privatization advisory commission in the coming weeks that will be charged with identifying new asset divestiture and privatization opportunities.
  • "Long-awaited bill to privatize Pa. liquor store system is unveiled" (Philadelphia Inquirer): Last week, Pennsylvania House Majority Leader Mike Turzai introduced House Bill 11, which would dismantle the PA Liquor Control Board's (PLCB) monopoly on the sale and distribution of wine and spirits. Under the proposal, the state would auction off 1,250 retail licenses (twice the number of current state-run stores) and sell off wholesale assets for an expected $1.5-2 billion in upfront revenues, and would replace the state's current 30% markup and 18% "Johnstown Flood Tax" with an excise tax of between $8-12 per gallon. Recent polls suggest that roughly 60-70% of Commonwealth voters are supportive of PLCB privatization.
  • "Costco revamps liquor-sales initiative" (Seattle Times): Costco has submitted more than the required number of signatures to get a new (and more palatable) initiative on the fall ballot that would privatize Washington State's archaic, state-run liquor monopoly (wholesale and retail). Costco was the sponsor of a previous ballot initiative last fall that suffered a close defeat at the polls, and the new initiative—Initiative 1183—addresses some flaws and lessons learned from the 2010 campaign.
  • "NJ Transit parking plan derailed" (New York Post): Despite the headline, the plan to lease NJTransit's massive parking assets hasn't really "derailed." Rather, the ongoing procurement process is complex and is being extended a few months.
  • "Florida may still consider privatizing camping at State Parks" (WPTV.com): Public resistance has prompted Florida Gov. Rick Scott to remove four state parks from consideration for expanded camping facilities delivered through PPPs, but the administration still plans to evaluate the concept at other state parks.
  • "Growing problem: Citizens Property Insurance CEO suggests privatization" (Naples Daily News): The CEO of Florida's state-owned insurer of last resort, Citizens Property Insurance, is interested in exploring the potential privatization of the enterprise to lower the growing financial risks to the state as the policyholder base expands.

Local Government

  • "Emanuel hires private firms for city recycling" (Chicago Tribune): Last week, Chicago Mayor Rahm Emanuel announced the privatization of recycling services in four of six zones of the city in a de facto public-private competition (the city will continue to serve the other two zones). The winning bidders were Waste Management and Midwest Metal Management, and WLS 890AM reports data from the Mayor's office indicating that the new privatization contracts will reduce the city's current costs of recycling collection from $13.8 million annually to $6.6 million, a savings of over 50%.
  • "Emanuel Acts on Layoff Threat" (Chicago News Cooperative): In addition to privatizing recycling services, the Emanuel administration also recently announced plans to privatize the city's water bill call center, airport and library custodial services, and employee benefits services as part of its push to drive down labor costs.
  • "City Hires New Finanical Advisor for Public-Private Partnerships" (DNAinfo): In New York City, the Bloomberg administration has hired a financial advisor, Greenhill & Co., to guide city officials on potential new PPPs in parking and real property management. More here from Crain's.
  • "Report by CAO endorses private partnership for LA Zoo" (L.A. Daily News): Los Angeles City Administrative Officer Miguel Santana has issued a report recommending the city proceed with creating a nonprofit public-private partnership to operate the Los Angeles Zoo, a privatization model that the overwhelming majority of accredited urban zoos nationally have already shifted to as a means to increase private fundraising and reduce/eliminate government subsidies.
  • "Private lessons" (Greater Baton Rouge Business Report): Sandy Springs, GA certainly isn't the only city to have incorporated and embraced a largely privatized model of municipal service delivery. Read this fascinating review of the city of Central, LA (located near Baton Rouge), which since 2008 has used a similar privatization model whereby contractors are used to deliver the bulk of city services. So far, so good in Central, where the city's lean-and-mean approach has produced a 20% budget surplus. Notably, the city has selected a new vendor, the nonprofit Institute for Building Technology & Safety, whose board of directors are officials appointed by the Council of State Governments, International City/County Management Association, the National Association of Counties, the National Governors Association Center for Best Practices and the National League of Cities.
  • "Memphis May Privatize Animal Shelter" (WREG News Channel 3): City officials in Memphis announced plans to issue a request for proposals to solicit a private operator for the beleaguered Memphis Animal Shelter, the subject of animal abuse scandals and mismanagement in recent years.
  • "Springfield opts to privatize trash pickup" (The News Herald): Officials in Springfield, FL have voted to contract out their residential waste collection to Waste Management. The company's bid proposed residential rates as low as $12.15/month for twice-per-week collection, less than half as much as the current city rate of $26.55 per month, according to the mayor's office.
  • "Winter Haven Commission Considers Privatizing Some Services" (The Ledger): The city manager in Winter Haven, FL has told officials that he plans to begin evaluating potential privatization and agency consolidation opportunities in the coming year.

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

Leonard Gilroy is Director of Government Reform


« Podcast on Mortgage Interest Deduction… | Main | China's Growth Heads to the… »




Out of Control Policy Archives