May 2, 2008

Common assets on the road to privatization – analysis
CA: Committee shoots down P3 bill
$1 billion each year didn’t help readers
TX: Gov. commitment to tolls shows with picks
Wisconsin governor’s troubled efficiency plan falls short
IL: Privatizations a ‘guarantee’ of infrastructure investment
MI: Custodial privatization talks tabled
Federal contracting chief quits under fire
Increasing reliance on private contractors in Iraq questioned

News Summaries
Common assets on the road to privatization – analysis
Why some politicians are so eager to sell off the construction and
maintenance of our public roads. As never before, state governments are
plunging ahead with new experiments in privatizing public roadways. The
deals offer investors huge profits from the large toll increases they
will charge on highways they control. But for the tax-paying public and
drivers, it’s a bad bargain. Over the long term, the public will not
receive the full value of the higher tolls that drivers pay. Private
operators will manage major highways in ways that maximize tolls and
minimize their costs rather than to serve the public interest. Many
cash-strapped state politicians are eager to avoid responsibility for
constructing or maintaining roads lest they be forced to raise taxes
and tolls themselves. But a look at the economics and governance of
road privatization sends a flashing warning of danger ahead.

CA: Committee shoots down P3 bill
California lawmakers killed Gov. Arnold Schwarzenegger’s public-private
partnership bill in a party-line committee vote this week. The bill
would have allowed arrangements in which a private partner could have
assumed responsibility for delivering, improving, operating, or
maintaining governmental facilities, including but not limited to
roads. It failed Tuesday on a 5-to-3 vote in the Assembly Business and
Professions Committee. The three "yes" votes came from Schwarzenegger’s
fellow minority Republicans. The five votes to kill the bill came from
majority Democrats. "In general, supporters of public-private
partnerships assert that California is not likely to meet the
infrastructure needs of a growing population without leveraging private
sector capital," the report said. "Opponents assert that public-private
partnerships increase costs to taxpayers because a profit margin is
built into a fee structure that already includes higher borrowing costs
than what is available to public agencies," it said.
The Bond Buyer
$1 billion each year didn’t help readers
President Bush’s $1 billion a year initiative to teach reading to
low-income children has not helped improve their reading comprehension,
according to a Department of Education report released on Thursday. The
program, known as Reading First, drew on some of Mr. Bush’s educational
experiences as Texas governor, and at his insistence Congress included
it in the federal No Child Left Behind legislation that passed by
bipartisan majorities in 2001. It has been a subject of dispute almost
ever since, however, with the Bush administration and some state
officials characterizing the program as beneficial for young students,
and Congressional Democrats and federal investigators criticizing
conflict of interest among its top advisers. Senator Edward M. Kennedy,
the Massachusetts Democrat who is chairman of the education committee,
and who has long criticized the program, said, ”The Bush
administration has put cronyism first and the reading skills of our
children last, and this report shows the disturbing consequences.” In
2006, John Higgins, the department’s inspector general, reported that
federal officials and private contractors with ties to publishers had
advised educators in several states to buy reading materials for the
Reading First program from those publishers. The Reading First
director, Chris Doherty, resigned in 2006, days before the release of
Mr. Higgins’s report, which disclosed a number of e-mail messages in
which Mr. Doherty referred to contractors or educators who favored
alternative curriculums seen as competitors to the Reading First
approach as ”dirtbags” who he said were ”trying to crash our
party.” International Herald Tribune
TX: Gov. commitment to tolls shows with picks
A week after Gov. Rick Perry said in a speech that he’ll fight to keep
toll roads at the center of any plans to solve Texas’ transportation
needs, he proved it by naming his former chief of staff to lead the
Texas Transportation Commission. Mr. Perry also reached inside the
board room of the North Texas Tollway Authority Wednesday, selecting
that agency’s vice chairman to also serve on the five-member
commission, which sets policy for the nearly 15,000-employee Texas
Department of Transportation. The new chairman is Mr. Perry’s former
aide, Deirdre Delisi, 35 of Austin. Ms. Delisi replaces Hope Andrade of
San Antonio, who had been serving as interim chairman. The appointment
of NTTA vice chairman William Meadows, a Fort Worth businessman, fills
the vacancy left open by the December death of commission chairman Ric
Williamson. Mr. Williamson was an old friend of Mr. Perry’s whose
outsized personality had helped push TxDOT’s pro-toll road policies
through several sessions of the Legislature, until they ran into a road
block last session. Dallas Morning News
Wisconsin governor’s troubled efficiency plan falls short
The headline-grabbing claim from Gov. Jim Doyle in March 2005 couldn’t
have been clearer. At a news conference, Doyle said his administration
would save taxpayers up to $200 million over four years through better
management of the state bureaucracy under the so-called ACE Initiative.
The state would negotiate new contracts to buy goods and services for
less money. It would sell off surplus property. And it would
consolidate a number of other functions across state government to find
savings. But three years later, a review shows the goals outlined by
the governor have not been met. His administration quietly killed the
initiative last year after faulty projections, unexpected problems and
bureaucratic resistance hampered the effort. Jill Malak, a spokeswoman
for AFT-Wisconsin, a state employees union, said her union warned the
program wouldn’t work from the beginning because it relied too heavily
on private contractors. "We haven’t seen any positive, quantifiable
results from the ACE initiative," she said. "And we have seen
corruption and the mismanagement of funds to a staggering level. It’s
either gross incompetence or something a little bit more insidious." Business Week
IL: Privatizations a ‘guarantee’ of infrastructure investment
Chicago Mayor Richard Daley said yesterday the proposed privatization
of Midway International Airport, the city’s recycling centers, and its
parking meter system would "guarantee" the continued investment in
neighborhood infrastructure and relieve pressure on city taxpayers.
"That will mean even more police and fire stations, libraries, parks,
and senior centers – all essential to neighborhood stability and
safety," Daley said in his annual state of the city address yesterday.
Six teams are interested in bidding for the right to operate Midway
under a long-term lease in exchange for an up-front cash payment, a
transaction that could raise several billion dollars and would mark the
first privatization of a major U.S. airport. An estimated 50-year lease
could fetch around $3 billion. The proposed parking meter system
privatization could raise more than $1 billion. The city launched the
national wave of government interest in entering into long-term leases
on existing assets with its $1.8 billion, 99-year lease of the Chicago
Skyway toll bridge in early 2005. The Bond Buyer (subscription)
MMI: Custodial privatization talks tabled
Talks of privatizing Pinckney Community Schools’ Buildings and Grounds
Department — including its 27 custodians — were tabled Thursday after
the department’s union made headway at the bargaining table the day
before. The board was prepared to authorize negotiations with Aramark
to privatize the department, but tabled the issue at Thursday’s regular
meeting in order to continue hammering out a deal to keep the employees
district employees. District officials have said as much as $430,000
could be saved through privatization. Under a private contract, the
district would only pay for the service, and save benefit, retirement
and other costs custodians receive as district employees. In recent
weeks, Lepkowski said privatization would further reduce the employees
to "poverty-level" income. Daily Press & Argus
Federal contracting chief quits under fire
The head of the U.S. government’s top contracting agency has resigned
amid accusations of misuse of authority, including allegations that she
tried to enlist agency officials to help Republican political hopefuls.
Lurita Doan is leaving the top spot at the General Services
Administration after a controversial tenure.Doan’s resignation comes 10
months after the government’s the Office of Special Counsel recommended
to the White House that she be disciplined to the "fullest extent" for
violating federal laws against using government employees for political
purposes, a finding she denied. The agency’s inspector general
criticized Doan for signing off on a $20,000 no-bid contract with a
friend’s public relations agency and accused her of "a disregard for
the rules" in managing the $17 billion agency. CNN
Increasing reliance on private contractors in Iraq questioned
Over the past few days, Chattanooga Police Department Officer Ricky
Ballard has been waking up early and going to bed late, hoping to soak
up as much of the city as he can — because after he leaves next week
for Iraq, he’ll treasure the atmosphere here more than ever. But
Officer Ballard is not being deployed to the war zone with the U.S.
military. The 12-year department veteran is choosing to halt a
promising career in local law enforcement to join the ranks of a
private security firm contracted to work for the federal government. It
is a popular job even during the fifth year of the Iraq war, and the
government has become more reliant than ever on the support these
contracted firms provide, said Charlie Cray, director of the
Washington, D.C.-based Center for Corporate Policy and co-founder of
Halliburton Watch. Though no one knows exactly how many private
contractors are working in Iraq, the total is estimated to be well over
100,000, said Mr. Cray, who believes the number of contractors now
outnumbers the total number of troops overseas. As of this week, there
were about 159,000 troops in Iraq and another 34,000 in Afghanistan,
according to the Department of Defense. Though reliance on contractors
is touted as a cost-saving measure, the strategy has been debated
recently within the U.S. Government Accountability Office, Mr. Cray
said. "We’ve had private contractors before," he said, noting that
their use has been documented at least as far back as World War II.
"However, the … use of contractors has ballooned to an extent that’s
unprecedented." Chattanooga Times Free Press (Tennessee)