Monday, April 28, 2014

Report on outsourcing public services to for-profit corporations

I've expressed doubts before about whether it makes sense to turn to private companies to provide public goods, but I missed this paper when it was published last December. Introduction:
Eager for quick cash, state and local governments across America have for decades handed over control of critical public services and assets to corporations that promise to handle them better, faster and cheaper. Unfortunately for taxpayers, not only has outsourcing these services failed to keep this promise, but too often it undermines transparency, accountability, shared prosperity and competition – the underpinnings of democracy itself. As state legislatures soon reconvene, policy makers likely will consider more outsourcing proposals. Out of Control: The Coast-to-Coast Failures of Outsourcing Public Services to For-Profit Corporations serves as a cautionary tale for lawmakers and taxpayers alike. 
Too often, outsourcing means taxpayers have very little say over how tax dollars are spent and no say on actions taken by private companies that control our public services. Outsourcing means taxpayers cannot vote out executives who make decisions that hurt public health and safety. Outsourcing means taxpayers are contractually stuck with a monopoly run by a single corporation – and those contracts often last decades. And outsourcing too often means a race to the bottom for the local economy, as wages and benefits fall while corporate profits rise. 
This report highlights the failed experiences of cities and states across the country that recently experimented with outsourcing in a variety of sectors. Organized by failures in transparency, accountability, shared prosperity and competition, these stories will show how hastily and ill- conceived outsourcing deals fail to protect taxpayers and the public interest. The last section will provide recommendations of responsible contracting practices, including implementation of ITPI’s Taxpayer Empowerment Agenda, which can mitigate the risks of outsourcing and ensure that public dollars are not blindly funneled into corporate coffers, but used to further a communities best interest.

1 comment:

  1. I have mixed feelings on this issue. Clearly most of the examples given in the paper are failures. I do strongly believe though and am believing even more that transportation infrastructure especially should be based on user fees. Just the other day I was driving on a toll road and was shocked how much better maintained it was than the free highways near my house(both toll and free are in the same state). To be clear the toll road(Mass Pike I-90) wasn't in 100% great shape but at least it didn't have potholes the size of my car like some free highways.

    One of the most surprising decisions I have to say in Canada was the removal of tolls in Quebec in the 1980s and early 1990s. I am actually old enough to remember tolls on the Champlain Bridge. What is even more shocking is when Champlain tolls were removed in 1990 Canada was running huge budget deficits. In fact I saw a blog post saying if tolls had been kept on the Champlain bridge and raised in line with inflation after 1990 there would have been enough money by now to have replaced the bridge without direct taxpayer assistance.

    I don't know all the details of some of the other tolls removed early in the 1980s but at one point highway 10 and highway 15 were both tolled. I wonder if Quebec had kept these tolls the highway network would be as run down as it is today.

    *In the US tolls in the states that had/have them were typically setup as a corporatized/independent authority and thus were more difficult to get rid of even if politically advantageous. My understanding though is both New York and Massachusetts had windows were at the time they could have eliminated tolls in the late 1980s and choose not to do so. Of course if they had done so road maintenance by now would have even been a bigger mess. Massachusetts recently put back in place some tolls that were eliminated in the late 1990s in order to raise more money for road maintenance.