Cities benefiting from privatization

By Chuck Martin

While our nation’s economy contracted during this recession and private companies reduced their work force by millions of jobs, the number of federal workers earning more than $100,000 increased more than 50 percent, according to the Bureau of Labor Statistics.

Yet here in Georgia, some governments are starting to get it right when it comes to managing employees. Sandy Springs, Dunwoody and Johns Creek are cities that have operated with a mindset unique to government. They have contracted with private companies to provide city services and reduce costs by hiring fewer employees.

We at the state Capitol have made a move in the same direction. The state Department of Corrections has contracted with private companies to expand two privately run prisons this summer. One was to break ground on Monday to construct and operate a 1,000-bed facility near Milledgeville. Each company operates the prisons at a cost savings to Georgia taxpayers.

In these tough economic times when taxpayers can’t afford to spend another dime in higher taxes, governments need to embrace more privatization efforts as a cheaper alternative to expensive employee benefits and pension obligations. It also provides a corporate career path for those who enjoy public service.

Johns Creek made a recent decision to cut back its contract with a private firm providing city services. In my opinion, governments throughout our state should be embracing more privatization models to reduce spending and prevent tax hikes.

Even New York Mayor Michael Bloomberg has hinted he may move in the direction of privatization when he hired former Indianapolis Mayor Stephen Goldsmith this summer as a deputy mayor. Goldsmith is noted as an innovator and the mayor who privatized a host of operations including Indianapolis’ International Airport.

Goldsmith’s “Yellow Pages Test” should be adopted by any government in today’s Great Recession. “If the phone book lists three companies that provide a certain service,” he says, government “should not be in that business.” He is correct. There is room for privatization and at great cost savings to taxpayers.

One need only look at states teetering on bankruptcy such as California to look at the need for alternative solutions to expensive employee payrolls.

Sandy Springs has been the national prototype of local governments that contract with the private sector, according to the Reason Foundation. It hired CH2MHill five years ago to provide public works and traffic engineering, finance, zoning, code enforcement, business licenses, municipal courts, parks and administrative services for five years.

Dunwoody has contracted with several firms to provide similar services.

As a result, cities with a privatization model have been more efficient. Sandy Springs has only 4.4 public employees per capita compared to Gainesville with 10.8 per capita; Woodstock with 7.1; Peachtree City with 7.3; and East Point with 12.9 employees per capita, according to government surveys compiled by the state of Georgia.

Sandy Springs also has a $22.5 million surplus this year and is using cash instead of bonds to build capital projects such as sidewalks and road improvements.

As vice chairman of the House Appropriations Committee, I have urged contracting with other private companies for more cost savings to our state’s $15 billion budget. There is room to consider using private operators to run our state parks, mental health facilities and state buildings, for example. Former Gov. Zell Miller was the first to embrace this concept when he hired a private firm to operate Georgia’s Stone Mountain, Lake Lanier Islands and group homes such as Brook Run.

California unfortunately moved in the opposite direction and hired so many state and local employees that residents and corporations are leaving the state because of high tax rates. The state Legislature has not been able to adopt a budget so far this year as it has a $19 billion deficit thanks to the 144,000 state employees who fight budget cuts and furloughs. Employee unions are more powerful than any other force in California.

Privatizing some government services would have prevented many of these problems before many of these workers were ever hired.

Georgia and all its local governments can’t afford to follow California by going down the path of creating more expensive and bloated government. Privatization will not only save our economy but save taxpayers’ checkbooks.

State Rep. Chuck Martin, a Republican from Alpharetta, is vice chairman of the House Appropriations Committee and former mayor of Alpharetta.