Commentary

North Carolina Budget Committee to Explore Privatization

North Carolina’s new Budget Reform and Accountability Commission met for the first time yesterday, and privatization will be among the strategies the group considers in its efforts to right-size state government. Per the Asheville Citizen-Times:

Leaders of the Budget Reform and Accountability Commission acknowledged that they have a tough job, with only an advisory role to Perdue and the General Assembly on budget cuts that will inevitably raise hackles.

Such reform has been tried before. Perdue reflected on another government-reform panel in the early 1990s that saw some of its recommendations enacted but couldn’t persuade legislators on others, like cutting back on state boards and commissions.

“Everybody knew that an ox needed to be gored, but nobody wanted it to be their ox,” she said.

Perdue wants the General Assembly to take up-or-down votes on the commission’s recommendations, an idea legislators have viewed skeptically. She said she would accomplish some recommendations unilaterally by executive order.

The idea of cutting down on boards could come up again, Perdue said. The commission is also looking into how the state makes purchases, how it pays for information technology, and how it funds the Department of Health and Human Services.

Every agency’s budget will be scoured for duplication and unnecessary programs, co-chairman Norris Tolson said.

“We will take a serious look at privatization of certain services in state government,” said Tolson, CEO of the N.C. Biotechnology Center and former secretary of revenue, transportation and commerce.

Gov. Perdue is on the right track by pushing for an up or down vote on the Commission recommendations—taking a page from the “original” BRAC (the federal Base Realignment and Closure Commission), where the up/down vote approach was the only realistic way to break down parochial political interests that would have had Congressmen scrambling to prevent military base closures in their districts/states. Voting straight up or down on the packages of base closures sidestepped those thorny political issues and led to meaningful closures.

I’m increasingly of the belief that this may be the only way out of the budget mess in a number of states where politics threatens the prospects for needed budget cuts and reforms, most notably California. However, legislators by and large tend to react negatively to such attempts to limit their flexibility in order to push tough decisions they would never put themselves in the position to make otherwise. Earlier this year, Louisiana Gov. Bobby Jindal tried the up/down vote approach when establishing the new Commission on Streamlining Government via executive order, but when the legislature subsequently codified the Commission into statute, they removed the up/down vote provision.

The reality is that without the ability to amend a reform package, legislators know that they would lose the ability to amend away cuts for pet programs and the like. My question is: if you screw up budgeting so badly that you’ve driven the state billions into the red, do you deserve not to be forced into the corner?

Reason Foundation’s Annual Privatization Report 2009
Reason Foundation’s Privatization Research and Commentary

Leonard Gilroy is Senior Managing Director of the Pension Integrity Project at Reason Foundation, a nonprofit think tank advancing free minds and free markets. The Pension Integrity Project assists policymakers and other stakeholders in designing, analyzing and implementing public sector pension reforms.

The project aims to promote solvent, sustainable retirement systems that provide retirement security for government workers while reducing taxpayer and pension system exposure to financial risk and reducing long-term costs for employers/taxpayers and employees. The project team provides education, reform policy options, and actuarial analysis for policymakers and stakeholders to help them design reform proposals that are practical and viable.

In 2016 and 2017, Reason's Pension Integrity Project helped design, negotiate and draft pension reforms for the state of Arizona's Public Safety Personnel Retirement System and Corrections Officer Retirement Plan, which both passed with overwhelming bipartisan support in the state legislature and were signed into law by Gov. Doug Ducey.

Gilroy is also the Director of Government Reform at Reason Foundation, researching privatization, public-private partnerships, infrastructure and urban policy issues.

Gilroy has a diversified background in policy research and implementation, with particular emphases on competition, government efficiency, transparency, accountability, and government performance. Gilroy has worked closely with legislators and elected officials in Texas, Arizona, Louisiana, New Jersey, Utah, Virginia, California and several other states and local governments in efforts to design and implement market-based policy approaches, improve government performance, enhance accountability in government programs, and reduce government spending.

In 2010 and 2011, Gilroy served as a gubernatorial appointee to the Arizona Commission on Privatization and Efficiency, and in 2010 he served as an advisor to the New Jersey Privatization Task Force, created by Gov. Chris Christie.

Gilroy is the editor of the widely-read Annual Privatization Report, which examines trends and chronicles the experiences of local, state, and federal governments in bringing competition to public services. Gilroy also edits Reason's Innovators in Action interview series, which profiles public sector innovators in their own words, including former U.S. Transportation Secretary Mary Peters, former Florida Gov. Jeb Bush, former Indiana Gov. Mitch Daniels, former New York City Mayor Rudy Guiliani and more.

Gilroy's articles have been featured in such leading publications as The Wall Street Journal, Los Angeles Times, New York Post, The Weekly Standard, Washington Times, Houston Chronicle, Atlanta Journal-Constitution, Arizona Republic, San Francisco Examiner, San Diego Union-Tribune, Philadelphia Inquirer, Sacramento Bee and The Salt Lake Tribune. He has also appeared on CNN, Fox News Channel, Fox Business, CNBC, National Public Radio and other media outlets.

Prior to joining Reason, Gilroy was a senior planner at a Louisiana-based urban planning consulting firm. He also worked as a research assistant at the Virginia Center for Coal and Energy Research at Virginia Tech. Gilroy earned a B.A. and M.A. in Urban and Regional Planning from Virginia Tech.