Reason Foundation's Annual Privatization Report 2007

Long-term toll road leases and global airport privatization among the top trends

Reason Foundation's Annual Privatization Report finds states are increasingly partnering with the private sector to build roads and reduce traffic jams that have become one of the biggest complaints among taxpayers living in nearly every mid- to large-sized city in the country. The report analyzes the latest developments in privatization and government reform in the areas of transportation, aviation, education, local government services, telecommunications, and eminent domain.

The Annual Privatization Report finds the most important trend of the last year is the rising tide of long-term toll road leases. Over 21 states have now passed laws enabling public-private partnerships that can be utilized to build much-needed roads and reduce gridlock.

"The congestion crisis is at a tipping point," said Leonard Gilroy, editor of the Reason report. "By 2030, 11 cities will have traffic that is worse than the gridlock in today's Los Angeles. States are awakening to the fact that if they don't do something soon, it will be too late."

Texas Gov. Rick Perry summed up the feelings of many state leaders in a recent letter to Congress, writing, "I encourage you to examine the fundamental question of why states are looking to engage the private sector in the first place. I will tell you the answer in Texas is that we could no longer wait for anyone else to solve our problems…congestion doesn't wait for Congress to make up its mind."

Reason catalogs the increasing number of states using public-private partnerships to battle the growing congestion crisis and gives detailed answers to many of the most common objections to these arrangements.

The report also finds it was a historic year for airport privatization. Globally, 15 major airports were privatized in 2006, the second-highest annual total ever (there were 21 airport privatization deals in 1998).

In its review of the federal government, the Annual Privatization Report finds existing federal employees and the private sector competed for contracts in 183 instances last year. These competitions produced a savings of $1.3 billion. Since 2002, 12 percent of the federal workforce has faced competition from the private sector and taxpayers have saved $6.9 billion as a result.

Streamlining efforts, based on the President's Management Agenda, resulted in 91 unnecessary federal programs being eliminated in fiscal 2008, saving $5 billion. And another $7 billion of taxpayer money will be saved through major cutbacks to 50 other non-essential programs.

When it comes to local governments, the report highlights Chicago, where Mayor Richard Daley has privatized more than two dozen functions and assets. Chicago recently privatized two parking garages, generating $563 million that is being used to pay off debt, improve city parks, and create a reserve fund for future projects.

In education, Reason finds over 4,000 charter schools are serving more than one million children across the country. Charters, which are privately operated schools under contract with government agencies, are proving very popular with families in places like Michigan, New York, and Wisconsin. In New Orleans, charter schools are playing a vital role in getting kids back to school after Hurricane Katrina: nearly 70 percent of the city's children are currently attending charters.

The Reason Foundation report flags the privatization of state lotteries as something to keep an eye on in coming years. Texas, Illinois and Indiana were among the states that looked into the concept this year.

Full Report Online

Reason Foundation's Annual Privatization Report 2007 is available at www.reason.org/apr2007.

About Reason

Reason Foundation is a nonprofit think tank dedicated to advancing free minds and free markets. Reason produces respected public policy research on a variety of issues and publishes the critically acclaimed monthly magazine, Reason. For more information, please visit www.reason.org.

Contacts

Chris Mitchell, Director of Communications, Reason Foundation, (310) 367-6109




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