Critics Resisting New Jersey Governor's Push for Further Privatization

Last month, New Jersey Gov. Chris Christie unveiled his $29.3 billion FY2011 budget proposal -- an extremely regressive plan that would only exacerbate the economic pain for the state's working and middle class families.  The Governor's budget relies on severe reductions to municipal and county aid, discontinuing property tax rebates, completely eliminating funding for grants to support clinical family planning services, cutting aid to school districts, letting an income tax surcharge on high-end earners expire, closing psychiatric hospitals, proposing a constitutional amendment to lower the property tax cap to 2.5 percent that may be placed on the November ballot, and reducing the state workforce by over 1,300 workers.  As state Sen. Stephen Sweeney concisely stated, "The wealthy people in New Jersey got a tax cut.  The middle class and the poor are going to get a tax increase.  It’s that simple."

Push to Privatize:  One of the more troubling aspects of the budget is the broad effort to privatize state services.  In early April, Gov. Christie established a privatization panel by Executive Order, seeking to identify $50 million in savings.  The state’s troubled history with privatization is well-documented.  In a recent hearing on the issue, the Executive Director of the state’s Commission of Investigation, Alan Rockof, cited the Motor Vehicles Commission distributing contracts to politically connected vendors in the 1980s, millions of dollars wasted on contractors for vehicle inspections, and the imprudent implementation of the E-Z Pass toll system that was fraught with high cost and delays due to private contractors.  He commented, “[i]f one common theme runs through all these disturbing case studies, it’s this: waste and abuse of the public treasury and public property can flourish if no one is minding the store on the public’s behalf.”

It is quite telling that the Governor's push coincides with the release of a report revealing the dangers of privatization.  SEIU Local 32BJ commissioned the Clarion Group to analyze contracts and financial data of 10 school districts that outsource their food services to two companies, Chartwells and Sodexo.  In the report, Hard to Swallow: Do Private Food Service Contractors Shortchange New Jersey Schools?, the group found that the corporations overcharged the 10 districts by $320,000 and "if the approximately 378 New Jersey school districts using FSMCs (food service management companies) are also being overcharged at the same rate, the total amount of taxpayer money being misappropriated would come to $12 million, or enough to pay the annual salaries of 186 New Jersey teachers."

These alarming numbers mirror the general pitfalls of privatization.  As PSN has noted previously, the policy often leads to the the loss of public control, lack of oversight and transparency, inability to establish standards, policy driven by profit rather than actual public need, endangerment of vulnerable populations, increased costs, eventual loss of public revenue, and inferior and unreliable service provision.  Dealing with the aftermath of the greatest economic downturn since the Great Depression, states can ill-afford to pursue costly, inefficient, and potentially damaging privatization schemes.

Clarion Group — Hard to Swallow: Do Private Food Service Contractors Shortchange New Jersey Schools?
New Jersey Office of Management and Budget - FY2010-2011
Progressive States Network - Privatization During an Economic Downturn: Still Inefficient and Problematic