by Howard Stephenson
The years of tight budgets appear to be over for a while. But with good times come greater temptations for policymakers to use the largess to grow government. Thanks to the availability of significant rainy day funds and the ability to extend bond payments during the last four years Utah was able to balance budgets in the face of stagnant and declining revenues. Many states without such rainy day funds turned to cost-cutting measures which Utah now ought to consider.
During the recent extended economic downturn many states looked to privatization to help save tax dollars, improve services and balance budgets. Privatization allowed the power of the free markets to ensure best prices for service delivery. In many states legislators and governors expanded current competitive initiatives or created new ones.
But not in Utah.
Utah has been slow to even experiment with competition to provide savings in government services. In a survey by the Council of State Governments half of states responding noted that the use of public-private competition was likely to increase over the next few years and nearly all of the other states said the current use of public-private competition would remain the same. Only Utah and four other states reported that private sector outsourcing would likely decline.
In their book The Price of Government David Osbourne and Peter Hutchinson said, “The fastest way to save money and increase value is to force public instituitions to compete.”
“Even legislatures historically dominated by Democrats are getting into the game,” said Geoffrey Segal of the Reason Foundation. “Two of the most union-friendly states — Hawaii and Washington state — have recently passed new legislation opening up their state’s workforce to competition. In 2001, Hawaii passed Act 90, which specifically allows the state and its counties to contract with private entities who can provide better quality services at lower cost than government agencies. Washington state passed a similar measure in 2002,” Segal explained.
Why is it that even many of the blue states participate in more cost-saving privatization than conservative Utah?
Florida has a lot of experience in privatization during the administrations of her last three Governors. “Florida’s vast highway system is largely the result of public-private competitions,” Mr. Segal said. “In an overwhelming majority of cases, contractors were selected to plan, design, construct and maintain Florida’s highways. More than $84 million has been saved throughout the life of these kinds of contracts on highway maintenance alone,” Segal noted.
Despite some setbacks, Florida Governor Jeb Bush persisted in utilizing the private sector and remains an example of effective leadership in this arena. “Recognizing the pitfalls, he set out to create a stronger more robust competition process,” Segal explained. “That led to the creation of the Center for Efficient Government, the most transparent, results-oriented, and accountable public-private competition process in all the land.”
I am convinced that Utah taxpayers can also benefit from utilizing the power of the free market in providing many of the government services now provided by state government, cities, counties and even school districts. For this reason, as a state senator I am sponsoring a bill to establish a two-year task force to develop proposals for privatizing government services, reducing or eliminating government getting into the business of business and where it is allowed to continue, to ensure that government agencies must obey the same regulations and pay the same taxes as their private sector competitors.
The task force should look at the example of Florida, other states, and countries such as New Zealand which have engaged the power of the marketplace to reduce costs and improve services.