Out of Control Policy Blog

Utah Strengthens State Privatization Board

Nearly two decades ago, the Utah State Legislature established the Privatization Policy Board (PPB). Its mission is to evaluate and make recommendations to state agencies concerning effective privatization of government services and to address concerns regarding unfair government competition with the private sector.

But with its membership heavily tilted towards public sector representation, the lack of clearly defined duties in its statutory mandate and no dedicated staff, the PPB's efforts thus far have been piecemeal at best. Only two successful privatization initiatives have been completed to date: contracting with Staples for procurement of the state's office supplies and contracting with Xerox to provide state printing services.

In the 2008 legislative session, State Senator Howard Stephenson and State Representative Craig Frank each sponsored bills designed to give the Privatization Policy Board powerful new tools for advancing privatization and in the process elevate Utah to the upper echelon of state privatization leaders. Both bills passed overwhelmingly in both houses and were signed into law by Governor Jon Huntsman, Jr. in May.

Rep. Frank's House Bill 75 expanded the membership of the PPB to include more private sector members and requires:

  • The PPB to develop a biannual inventory of "inherently governmental" and "commercial" activities and services performed by state agencies;
  • The PPB to develop an accounting method to facilitate accurate cost comparisons between public sector and private sector service providers;
  • The PPB to investigate citizen complaints of unfair government competition with a private enterprise; and
  • The governor's office to examine at least three potential services or activities for potential privatization every two fiscal years.

Senate Bill 45, sponsored by Sen. Stephenson, goes even further by requiring Utah cities and counties of the first and second class–which includes the majority of Utah's local governments–to submit biannual government activity inventories to the PPB, similar to those that will be prepared at the state level. Also, the bills created a new, full-time staff position to serve the PPB.

This policy echoes the Federal Activities Inventory Reform (FAIR) Act passed by the U.S. Congress in 1998. It requires annual inventories that identify which activities within the federal government are "inherently governmental" (i.e., a job only government can do) and which are "commercial" (i.e., which can normally be obtained from private enterprise). With this information agencies can identify services that can be competed
or privatized. As a result of the FAIR Act, agencies have identified more than 800,000 federal employees
engaged in activities–such as data collection, administrative support and payroll services–that could be provided by the private sector.

The Commonwealth of Virginia adopted a similar process at the state level. Under the direction of the Commonwealth Competition Council (CCC), a survey of state agencies was conducted in 1999 to determine what commercial activities were being conducted by state personnel. In the 1999 survey alone, the CCC identified 205 commercial activities that were being performed by nearly 38,000 state employees. According to the CCC's first director, actions taken at the Council's recommendation (based on the inventory results) currently are estimated to be saving Virginia taxpayers at least $40 million per year.

For more, see my testimony here and this Salt Lake Tribune op-ed.

And for more on state-level privatization, see Reason's Annual Privatization Report 2008.

Leonard Gilroy is Director of Government Reform


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