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Reason Foundation

Looking at the Year's Privatization Trends

From transportation and infrastructure to state lotteries, public-private partnerships could play big role in erasing budget deficits

Leonard Gilroy
August 7, 2008

Privatization remains a key policy focus as public officials grapple with deteriorating fiscal conditions, according to Reason Foundation's Annual Privatization Report 2008. Now in its 22nd year of publication, the privatization report is the world's longest running and most comprehensive examination of privatization news, developments and trends.

The "Federal Update" presents an update on the Performance Assessment Rating Tool (PART)-used by the Bush administration to rate programs and determine budget priorities-as well as the latest on the President's competitive sourcing initiative. Despite a slowdown in use, PART continues to save taxpayers billions of dollars. We also review the recently-passed farm bill, which perpetuates a dysfunctional subsidy and earmark program desperately in need of reform.

The "State and Local Update" includes a roundup of privatization action across the country, including articles on the revamping of Utah's state privatization board, Florida's controversial outsourcing initiatives, and Indiana's government reform efforts. We also detail the latest on Chicago's infrastructure privatization innovations, managed competition in San Diego, and Georgia's contract cities movement.

The Annual Privatization Report also provides a comprehensive overview of domestic and international developments in air and surface transportation, including a wide-ranging overview on infrastructure finance, a discussion on public-private partnerships in the context of global economic competitiveness, and a review of the latest in air traffic control reform and airport security.

The "Emerging Issues" section examines three issues that continue to attract a great deal of attention in policy circles. First, the latest federal and state efforts to make government more transparent - Google government - by giving taxpayers access to spending information online. Second, the state lottery privatization proposals that seem to be spreading to more and more states. And third, we review an emerging area of interest in infrastructure public-private partnerships: our nation's seaports.

The "Education" section offers a comprehensive update on school choice, with features on the bipartisan push for more choice, growth in special needs scholarships, charter school achievement, and the growth in school empowerment and weighted student formula programs over the last year.

The Annual Privatization Report also covers the ever-changing world of telecommunications policy, with updates on network neutrality, video franchise reform, and Internet taxation. In addition, we include an article detailing how cities, once enthusiastic about developing municipal broadband systems, have started to grow wary of funding and owning their own broadband systems after observing the pattern of revenue shortfalls and cost overruns in existing systems.

Developments in the private corrections and water industries, including an article on an emerging threat to private water utilities in Scottsdale, Arizona, and several other communities nationwide: de-privatization through the use (or threat) of eminent domain.

Lastly, we offer an update on land use and environmental issues, with feature stories on Houston as a model for local land-use regulation and the impact of Florida's Growth Management Act on housing affordability in the state. We also review recent developments in eminent domain reform and regulatory takings reform.

With the federal government facing a record $482 billion deficit in 2009 and at least 23 states fighting budget shortfalls that could total $23 billion, the fast-moving arenas of public-private partnerships and government reform should play a key role in the coming year.


Leonard Gilroy is Director of Government Reform


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