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Abdication by Lawmakers Leaves Privatization Mess

posted in: Weekly Commentary | 0
By Lowell L. Kalapa

It has become painfully apparent in the last few weeks that lawmakers again failed miserably to address some of the most critical issues facing government and its taxpayers today. In this case, it is the issue of privatization.

There has been a lot of confusion, as emotional barbs are thrown back and forth in the debate, but there is one thing that the taxpaying public should understand and that is the courts did not say that the practice of contracting out public services cannot be made legal. Note well, the last statement, it is not a denial of the fact that what the court did seem to say is that there is no specific law authorizing the state and county governments to contract out with private providers of public services.

In fact, it seemed that the courts were trying to give lawmakers a “heads-up” before the adjournment of the 1997 session by submitting the first opinion. However, while the House seemed to “get” the message by proposing a bill that would authorize the contracting of private services, the Senate took the “let’s study it approach” by putting off the decision for two years and providing a temporary exemption for certain contracts. In the end, this play killed the bill and no resolution was adopted.

Now the courts have affirmed the lower court ruling and the counties, especially the neighbor island counties, are scrambling. Although some union leaders are backing off by saying that the decision does not affect other contracts, the Mayors of the neighbor island counties appear to be justified in their concern that if other contracts are mirror images of the disputed contract, then those contracts must be in violation of the law given the court’s ruling.

One of the major weaknesses of the court’s ruling is that it believes that services “traditionally performed by public employees” cannot be contracted out if it means a public employee job is eliminated. While that statement is a matter of interpretation, it would seem that the term “traditional” ignores that times have changed and are continuing to change.

If one were to take the approach that services traditionally provided by public employees should continue to be provided by those employees, one could argue that government should continue to record tax collections by long hand in a large black ledger. Don’t even thing about computers because government didn’t use computers back in the 1930’s.

So what should be the measure of what services can be privatized? One need only see what services are currently being provided by private companies. Services that immediately come to mind include security, janitorial services, refuse collection, and yard maintenance.

Does privatization mean that people will be put out of work? No, after all, the job will still need to be done, but instead of being a public employee, the person will be paid by a private company. What it does mean is that public dollars can be used more efficiently.

How much of a difference could this mean in costs? It is estimated that fringe benefits for employees in the private sector average about 30% of payroll while one county official recently stated that fringe benefits for employees in the public sector average as high as 63% of payroll.

Then there are simply common sense reasons for contracting out certain public services. For example, in one county it takes two county workers nearly three hours to reach a rural county park where they do two hours of maintenance work before they head back to the barn for another three-hour ride. It would make more sense to contract out with some local company in the rural community to do the park maintenance, getting more actual maintenance work done.

In the long run, the inability to privatize certain public services contributes to the inefficiency of government, restricts the flexibility of government to respond to the changing needs of the community, and insures that not only will the cost of operating government rise, but gives certainty to the fact that taxes will have to be increased.

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