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Altaf Rahamatulla on August 25, 2011 - 1:26pm
Several right-wing lawmakers utilized the weak economy to pursue damaging and radical proposals in legislative sessions this year. Some of the more egregious measures have included efforts to privatize functions of state government, including libraries, youth shelters, group homes, ambulance services, and transit networks. The pursuit of privatization is often rooted in misleading ideology that mythologizes private sector efficiency rather than demonstrable results of savings or quality. In fact, several privatization schemes have compromised service delivery, increased costs and fees for taxpayers, and severely reduced public accountability.
In February, Ohio’s conservative Governor, John Kasich, signed a bill to replace the state’s Department of Development with a private nonprofit, questionably entitled, JobsOhio. The privatized entity would be funded by taxpayer dollars, but headed by private interests. One of its major functions would be to direct public resources and incentives to corporations in the name of economic development. JobsOhio would also not be subject to the state’s public records law. This past week, the Governor reported that over 200 state jobs will be eliminated as a result of the push for privatization.
With almost 9 percent unemployment and still suffering from the recession, the state can ill-afford the deleterious impacts and costs of privatization. Ohio state Rep. Matt Lundy further outlines some of the major problems with JobsOhio: “Now as the Governor has detailed how Ohio’s economic recovery will be left to a small group of unaccountable, private interests with the authority to award millions in tax dollars to whomever they see fit, I pause with great concern.”
These issues parallel the conclusions of a Good Jobs First report, Public-Private Power Grab: The Risks in Privatizing State Economic Development Agencies, which finds that “rather than making economic development activities more effective, privatization is often little more than a power grab by governors and politically connected business interests,” that can result in misuse of state funds, corruption, conflicts of interest, and lost accountability. For instance, Michigan, a state that has a semi-privatized commerce department, distributed $9.1 million in tax credits to a convicted embezzler last year.
Other efforts in the states to transfer public functions to private hands are additionally raising a number of red flags. For instance, Florida will soon proceed with privatizing 30 prisons, which has already led to millions of dollars in unexpected costs for the public. In Louisiana, the planned privatization of the state’s Medicaid system, which will direct over $2 billion in taxpayer dollars to private insurance companies, has moved forward with limited input from the public and minimal legislative oversight or approval.
Privatization comes at the expense of long-term investments in the community, sustainable budget policy, taxpayer protections, and public accountability. Further, transferring public assets to private interests can hinder the already precarious economic outlook.
Full Resources from this Article
In the Public Interest - A Guide to Evaluating Public Asset Privatization
This article is part of PSN's email newsletter, The Stateside Dispatch.
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