Earlier this month, the Missouri-based Show-Me Institute released a report examining ways that Missouri’s state and local governments can and do partner with the private sector to provide an array of public services, as well as challenges that some jurisdictions have faced in contracting out services and best practices in implementation. I recently interviewed Show-Me Institute Director of Local Government Policy David Stokes, the report’s author, on its findings.
Leonard Gilroy, Reason Foundation: Why did the Show-Me Institute decide to pursue research on privatization in Missouri?
David Stokes, Show-Me Institute: The Show-Me Institute has always been interested in privatization and has covered the topic since 2007. Our earliest work documented the great success of privatizing the Saint Louis County Health Department’s pharmacy a decade ago. The interesting thing is that, with the exception of toll roads, Missouri’s laws are actually pretty good on the topic of privatization. Yet many cities and counties have only barely tapped into the opportunities offered through privatization of golf courses, trash pick-up, and more. We wanted to tell the stories of successful privatizations around the state so they can serve as an example for local officials and citizen activists throughout Missouri.
In addition to the new report, we’ve released an interview with a local mayor—Ferguson Mayor James Knowles—who has supported privatization in his community. We also have some examples of privatization reports, contracts, and ordinances that can serve as an example for Missouri officials and citizens looking into the issue further.
Gilroy: What areas of privatization are common in Missouri?
Stokes: Historically, the state has been the leader in “private places.” Those “private places” are older subdivisions, often built a century or more ago, where the private sector, in the form of the subdivision association, provided services for the residents instead of the government. This was most common in Saint Louis and its central suburbs, but you can find it all around the state. Neighborhoods were built throughout Saint Louis where the streets, sewers, land use rules, security, and more were all provided or enforced privately. Over time, the government took over the sewers, and zoning has overlaid (but not replaced) indentures. Standard police have taken over the primary security roles (although often augmented with private security). The streets, however, are still private in many of these areas.
As a resident of one of those private streets in suburban Saint Louis, I know first-hand that the system of private street maintenance and assessments works very well.
A more modern area where Missouri is a privatization leader is airports. Branson has America’s only fully private commercial airport. It is experiencing some financial difficulties now, but we are hoping for its long-term success.
Gilroy: Which cities or counties are leaders in privatization? Which ones are lagging?
Stokes: On the whole, successful examples of privatization can be found around the state in big cities and small towns. But of course, some areas are taking a lead. Independence, just outside Kansas City, is a real leader in privatization. The city recently enacted privatization reforms for its mass transit and animal control. Furthermore, trash-pick up in Independence has always been private with the government playing no role.
Saint Louis County is another leader. The pharmacy privatization, which was mentioned earlier, was a total success, both saving money and improving services for residents in need. Furthermore, Saint Louis County is one of the nation’s largest counties where all three major utilities are completely private. Finally, the City of Saint Louis has several excellent examples of how to use private companies to manage the operations of facilities such as golf courses and the ice rink in the city’s wonderful Forest Park.
The principal, and somewhat surprising, laggard in privatization in Missouri is Springfield. It is a free-market-oriented city in many ways, but every utility is part of a city-owned-and-operated entity: City Utilities. With so many other parts of the state served by private utilities, it is surprising that one of the most conservative parts of the state still operates utilities in this manner.
Gilroy: Were there any areas that you found Missouri to be lagging other states?
Stokes: We’re lagging other states in the area of toll roads and the private financing of highways and bridges. Our state constitution prohibits toll roads in most instances, and attempts to address that prohibition have failed. We need to invest more in highway and road infrastructure in Missouri, and the lack of a private financing mechanism is harming our state.
If the Missouri Constitution was changed to remove the prohibition against tolling, or if there was more political will for ways to address those needs without running afoul of the Constitution, like implementing highway public-private partnerships, this state could really move forward.
Other than that, the laws in Missouri are favorable regarding privatization and all it takes is the political will and hard work to make privatization succeed for residents and taxpayers.
Gilroy: What privatization areas are ready for expansion in Missouri?
Stokes: A large number of cities and counties are hopefully going to consider fleet management and specialized recreation management in the near future. Companies such as Enterprise are fully capable of operating a government vehicle fleet more efficiently than the government can. Experts in golf courses, swimming pools, ice rinks, and other areas are also proving that they can do a better job of managing those assets than the government.
Also, more and more localities are trying to work with non-profit animal charities for shared animal control duties. This area has a great deal of promise for privatization as well.
[The Show-Me Institute report—Government Privatization In Missouri: Successes, Risks, and Opportunities—is available here.]
Leonard Gilroy is director of government reform at Reason Foundation and is the editor of the Privatization & Government Reform Newsletter, available here. This article was featured in the February 2014 edition of the newsletter.