Privatization and Government Reform Newsletter: Local Revenues Exceeding Expectations, Protecting Digital Privacy, and More
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Privatization and Government Reform Newsletter

Privatization and Government Reform Newsletter: Local Revenues Exceeding Expectations, Protecting Digital Privacy, and More

Plus: Puerto Rico seeks renewables and storage, Hawaii awards Medicaid contracts, Fresno State closes on energy public-private partnership, and more.

Main Articles

  • Local Government: Local Revenues Exceeding Expectations
  • Education: Prince George’s County’s K-12 Public-Private Partnership
  • Telecommunications: Protecting Floridians’ Digital Privacy

News & Notes

  • State Government: Hawaii Awards Medicaid Contracts, Mississippi Liquor Bill Fails
  • Energy: Puerto Rico Seeks Renewables And Storage
  • Higher Education: Fresno State Closes On Energy P3, Iowa Approves Bookstore Deal
  • Local Government: New Orleans Narrows Theme Park Redevelopment Search, City in New York Outsources Waste For Savings And Better Services
  • Federal Government: GSA Inspector General Exposes Fleet Underutilization

Main Articles

Local Government Tax Revenues Are Exceeding Expectations 

One of the brighter spots for state and local governments during the pandemic has been finding out the worst-case revenue projections resulting from the COVID-19 pandemic have largely not come to fruition. While also subject to variation across locations, many local governments, at least so far, are largely finding their tax revenues are meeting, and often exceeding, the low projections. In a recent article, Reason Foundation’s Marc Joffe explores why the local government revenue news warrants some optimism and why “the most pessimistic revenue scenarios outlined at the beginning of the COVID-19 crisis are failing to materialize for most local governments.”

Prince George’s County’s K-12 P3 Provides Effective Blueprint Ripe for Replication

Prince George’s County Public Schools (PGCPS) reached financial close with Prince George’s County Education & Community Partners—a consortium comprising Fengate Asset Management, Gilbane Development Company, Gilbane Building Company, Stantec, and Honeywell—on a 30-year public-private partnership (P3) to design, build, finance, and maintain six of the Maryland school district’s schools. While the PGCPS project may be the first successful P3 of its kind, the thinking behind the project seems applicable to many jurisdictions. School districts can recognize that the goals of educating students and providing the facilities in which to educate them require different resources and know-how, and the private sector can help. 

The agreement allows PGCPS to oversee the broader direction of the new school facilities while capitalizing on private sector resources to save an estimated $174 million in avoided deferred maintenance costs and construction costs. In a recent article, Reason Foundation’s Austill Stuart dives into the agreement further and highlights how other jurisdictions could utilize similar agreements to put school facilities management on a more lifecycle-focused approach. Such a redirection would give school districts newer facilities and avoid many of the deferred maintenance problems that plague older school facilities. 

Florida Bill Would Strengthen Florida Citizens’ Digital Search Protections

Florida Senate Bill 144 looks to ensure Floridians’ digital property privacy remains as protected from unreasonable searches as physical property. The bill received a favorable vote from the State Senate Judiciary Committee earlier this month after receiving one from the Senate’s Criminal Justice Committee in January. In testimony presented to the Florida Senate, Reason Foundation’s Vittorio Nastasi and Adrian Moore explain why SB 144 is crucial for Floridians’ digital privacy protection. While recognizing a need for law enforcement and other authorities to obtain personal digital information may be legally justifiable in some cases, the availability of data raises numerous questions over when and how such information can be obtained, and how it is used.  “It is vital to protect important personal data in all forms, analog or digital,” they write. 

News and Notes

State Government

Hawaii Awards Managed Medicaid Project Contracts

The Hawaii Department of Human Services announced in March that it would be rewarding contracts to five private health plans to operate the state’s managed Medicaid program. Alohacare, Hawaii Medical Service Association, WellCare Health Insurance of Arizona, and United HealthCare will receive statewide contracts, while Kaiser Permanente will be awarded a contract confined to the islands of Oahu and Maui. The five-year contracts combine to $11 billion and also include three-year-long extension options combining to total $2 billion per year. The new contracts, which will take effect in July, replace contract awards rescinded early last year due to the onset of the COVID-19 pandemic.

Mississippi Legislature Passes, Kills Liquor Privatization Bill

The Mississippi State Senate, following the House’s affirmative vote last month, passed and amended a bill to end the state government monopoly of liquor sales in early March. Covering both wholesale and distribution, House Bill 997 would have created a license for private firms to take over government monopolies. A week later, however, the bill died when it was denied a chance for a conference committee.  


Puerto Rico Energy Utility Releases RFP for Renewable Energy, Storage 

The Puerto Rico Electric Power Authority (PREPA) released a request for proposals (RFP) seeking private partners to expand the island’s renewable energy generation capacity by one gigawatt and its energy storage capacity by 500 megawatts. The PREPA request is the first of a series of tranches to expand renewable energy generation by 3.75 gigawatts and energy storage capacity by 1.5 gigawatts over a three-year period. The requests serve in part to comply with Act 17, approved by Puerto Rico’s legislature in 2019, which requires the territory to obtain 20percent of its energy from renewable resources by next year, scaling up to 40percent by 2025, and reaching 100percent by 2050. Responses to the RFP are due in May.

Higher Education

Fresno State Closes on Energy Public-Private Partnership

Fresno State University and consortium Bulldog Infrastructure Group reached financial close on a 33-year concession lease of the school’s utilities, a P3 agreement worth $600 million. Consortium member Meridiam secured a $170 million sustainable development goal bond for part of the project’s financing, contingent on the partnership reducing 30 percent of the system’s consumption. If met, the energy savings would trigger an interest rate reduction, while failing to meet and maintain the ambitious goals would result in a financial penalty to the consortium, which also includes Noresco and GLHN.

The University of Iowa Approves Bookstore Outsourcing Contract

The Board of Regents for the University of Iowa approved a contract for Follet Higher Education to manage and operate the school’s “Hawk Shop” and University bookstore, the school newspaper The Daily Iowan noted. The school issued a solicitation last year after continuing to lose money operating it over the past five years. The agreement requires Follet to keep the store in its present spot, on the ground floor of the Iowa Memorial Union building, and requires the contractor to pay an undisclosed percentage of revenues back to the school. Follet will also be required to submit $250,000 payments for each five-year management term, annual $100,000 payments for utilities (which are managed by an Engie-Meridiam consortium in a P3 that reached financial close last year), and a combined $60,000 annually for student life and library programs. All current university employees will also be retained by Follet, which will take over operations in April.

Local Government

New Orleans Selects Three for Theme Park Site Redevelopment 

Earlier this month, New Orleans announced it had shortlisted three finalists—Bayou Phoenix, Kiernan West and S.H.I.E.L.D., and Situs Development Collective—for its project to redevelop the site of a former Six Flags theme park, also once known as Jazzland. The city nearly sent out a request for qualifications (RFQ) late last year for the 150-acre site, which has sat idle since destruction during Hurricane Katrina in August 2005. After the theme park company declared bankruptcy, the city ended its lease with Six Flags in 2009 and the city’s industrial development board took control of the site.

City in New York Votes to Outsource Residential Solid Waste

The common council of Gloversville, New York, voted 5–2  to contract out residential solid waste pickup to Twin Bridges Waste and Recycling. Mayor Vince DeSantis expects the contract to save $500,000 over its four-year term, the Daily Gazette reported. Director of Public Works Chris Perry added that the move would allow two current employees to remain in higher-priority functions of removing trash from catch basins and road repair. Perry also noted the deal would likely help rein in worker injuries, which has been a problem in recent years for the solid waste crew. 

Federal Government

GSA Inspector General Finds Costly DC Fleet Underutilization, Recommends Selling Vehicles

A report released by the federal General Services Administration’s Inspector General (IG) in late February found significant underutilization of its DC-area-based vehicle fleet. Citing the agency’s own vehicle replacement standards, the Inspector General found a potential $2.1 million in savings for which it faults the lack of requirement for agency offices to remove underutilized vehicles from their fleets. It also found only one of the 114 vehicles of the NCR (“National Capital Region,” i.e., D.C. area) vehicle fleet met the minimum mileage guidelines to qualify a vehicle for full-time use.

Quotable Quotes

“Since the 2008 flood when the bookstore was not able to operate in the Iowa Memorial Union for many years, and with the ever-increasing online competition for books and apparel, the university-operated bookstore has financially struggled and has operated at a loss for many years—since 2015.”

—University of Iowa Business Manager David Kieft in The Daily Iowan,  referring to problems that led to the school’s new bookstore contract with Follet

“OAS [The GSA’s Office of Administrative Services] lacks any mechanism to require internal fleet customers to remove underutilized vehicles from the inventory and ensure efficiency…Assuming continued underutilization, NCR could save up to an estimated $2.1 million by reducing its fleet of underutilized vehicles based on the average six-year minimum replacement standard of GSA’s standard use vehicles.”

—From a February 2021 report conducted by the U.S. General Services Administration’s Inspector General showing costly underutilization of the vehicle’s DC area fleet, as well as inadequate driver vetting and vehicle inventory management problems

“The government should have to meet the same standards and processes for accessing our personal information in digital form as the constitution set out for our information when it only existed in hard copy. For this reason, it is imperative that digital communications privacy be enshrined in the state constitution.”

Testimony by Reason Foundation’s Adrian Moore and Vittorio Nastasi, on Florida Senate Bill 144