Right now, the number one job of every public official, including state legislators and the governor, our representatives in Congress and our new President, is to revitalize our economy and put our people to work. Here in California, that means promptly passing a budget that solves our state’s budget crisis, stimulates the economy and creates jobs. We’re facing a $40 billion budget shortfall and the real possibility of insolvency within a month or two if we don’t get a budget in place. With 9.3% of Californians unemployed and many more struggling, nothing should get in the way of helping get California’s economy back on track. Any distraction from solving our budget crisis is a dereliction of duty.
Unfortunately, the Governor Schwarzenegger is stalling a solution to the budget crisis by pushing legislative leaders to accept unrelated and potentially dangerous measures to privatize vital infrastructure projects. For instance, California, like most states, funds infrastructure through the low-cost, tax-exempt municipal bond market, where private investors’ money helps build schools, roads, flood-control and other necessary projects while paying those investors a fair rate of return.
Now the governor wants to force the Legislature to experiment with a dangerous scheme for private firms to raise the money for transportation projects, only to be paid back later by Californians, undoubtedly with quite a bit of profit. So instead of a low-cost, tax-exempt way of raising the money, the governor is pushing to spend more of your money to profit of private investors. Doesn’t make sense, does it? The U.S. Government Accountability office recently reviewed the deceptively-named public-private partnerships and concluded: “While private investors can make billions of dollars available for critical infrastructure, these funds are largely a new source of borrowed funds, repaid by road users over what potentially could be a period of several generations. There is no “free” money in highway public-private partnerships.”
That approach may be a dream come true for ideologues who want to privatize our vital public services, and it may be easy for those politicians who want to pretend that they are not raising taxes. But sooner or later we’re going to have to pay for the roads, schools and other infrastructure that our state needs and the public-private partnership proposals mean we’ll pay more in the long run as those private contractors seek profit from the deal. That has been demonstrated across California. The price tag for San Diego’s public-private partnership toll road (State Route 125) went from $360 million to $843 million by the time it opened a year late in 2007; the cost overruns will be paid by Californians with ten years of additional toll costs.
The governor also wants to be able to outsource vital public services in packages that won’t necessarily generate or save any money to address California’s budget problems. The so called design-build proposal would effectively eliminate competitive bidding on construction contracts and might compromise quality in vital infrastructure. That scheme has increased costs to California taxpayers: in four design-build projects, $2.2 billion has been wasted without expediting project completion. For example, Orange County’s State Route 22 ballooned from a cost of $271 million to over $600 million after becoming a design-build project. Why does the governor want to spend more of our money while potentially risking quality?
These ideas have been defeated in the Legislature because they just don’t work and they just don’t serve California. California State Treasurer Bill Lockyer wrote in January in the Sacramento Bee “In fact, the single-minded drive to gin up a gold rush by increasing private companies’ share of the public infrastructure market has helped push California closer to fiscal calamity.”
Now, for whatever reason, the governor is delaying steps toward economic recovery and job creation by trying to push these failed schemes to privatize state government functions as part of the resolution to our budget crisis. You and I know there’s no such thing as a free lunch. But by pushing these schemes, Governor Schwarzenegger is trying to pretend that there is.
After decades of state and local government experiments with contracting out, the benefits of private delivery of our vital public services have proven to be elusive. Contracting out often results in higher costs, poorer service, increased opportunities for corruption and diminished government flexibility, control and accountability. Governor Schwarzenegger’s privatization schemes offer more of the same for California – more risks with little promise of benefit.
Governor Schwarzenegger is trying to push a bad idea on the state. It’s bad for California’s economy, bad for our infrastructure, and bad for Californians’ pocketbooks. These risky privatization schemes won’t stimulate California’s economy. They may well cost California jobs. Even more importantly, this is a distraction from the important work we need to be doing in Sacramento to fix what’s wrong with our state. And with our floundering economy and budget crisis, that’s something we can’t afford. And as long as he keeps trying to shoehorn them into the budget bill, Governor Schwarzenegger is delaying the important resolution of the state’s budget crisis that will stimulate the economy and create jobs. It’s time for the governor to be constructive by agreeing to a reasonable budget without irrelevant extras.
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Willie L. Pelote, Sr. is an Assistant Director of the American Federation of State, County and Municipal Employees (AFSCME), AFL-CIO. AFSCME is the largest public sector union in the country representing 1.4 million members nationwide.
