States Tap Public-Private Partnerships in 2011
Public-private partnerships aren’t just for roads anymore. Reason’s Annual Privatization Report, released this week, is packed with diverse examples of states leveraging the private sector to stretch tax dollars. In California, officials are looking to the private sector to keep state parks open, Ohio privatized its economic development agency, and Puerto Rico is in the process of leasing the San Juan International Airport.
In fact, many of the government functions successfully privatized in full or in part last year are the same functions under consideration for privatization in Pennsylvania.
Liquor Privatization: Nearly 70 percent of Pennsylvanians want to end the antiquated government wine and liquor monopoly. In late 2011, Washington state moved to fully privatize the sale and distribution of liquor via voter initiative. One-time state revenues from auctioning off distributions centers totaled $28.4 million, and the state will reap an estimated $216 million in additional revenues from the new license fee structure.
Lottery Management: The Corbett administration recently announced it is exploring private management of the Pennsylvania Lottery. Illinois’ groundbreaking lottery privatization program got underway in 2011. The intiative is designed to generate an additional $1 billion in revenues to the state over the next five years. The contract also includes incentives for extra profits; however the contractor must pay penalties if the company fails to hit revenue targets. The state will continue to control all significant business decisions and the contractor retained all state employees. In fact, Northstar plans to hire an additional 100 private sector workers.
Highway Maintenance: Pennsylvania’s transportation crisis stems from poor management, not a lack of revenue. In New Jersey, Gov. Christie is looking to get the biggest bang for taxpayers’ buck by bidding out three-year highway maintenance contracts. The contract is designed to give private companies the same flexibility as NJDOT crews, but unlike public crews, they must meet performance standards or risk losing their contract. These include removing hazardous roadkill and debris immediately upon notification, repair potholes within 48 business hours, and arrive at emergencies within two hours.
While Pennsylvania has largely failed to implement any signifanct privatization initiative, it still gets recognition in the report for contemplating opportunities in a section called Corbett Administration Embracing the “Yellow Pages Test” in Pennsylvania.
Using the best practices and lessons learned from other states, Pennsylvania can utilize private sector practices and reap significant savings while providing better service. Now that’s a win-win.
Check out the full report for more examples in health care, welfare services, and corrections.