October 28, 2014


Bertha and the French Professor: Lessons for Public Private Partnerships. Jean Tirole is an influential, respected, and by all accounts gracious man who won this year’s Nobel Prize in economics. Bertha is a 7,000-ton tunnel boring machine that’s been stuck under Seattle for nine months—but is still tweeting—as state officials and a private contractor battle over who should pay to get her out. . . . Tirole has studied a more subtle problem: contingencies that are “observable but not verifiable” or enforceable in a court of law. That’s Bertha. No one foresaw that she would be stopped when she bumped into an 8-inch pipe after going only 1,000 feet, and now no one can agree on whose fault it was and who must pay. Importantly, in cases like Bertha or the Indiana Toll Road, the private contractor can walk away, but the state cannot. . . . The message from both Prof. Tirole and Bertha is: Contracting is rough business. States and localities need help thinking through all of the challenges, especially in the blinding light of what may look like easy money. Tax Policy Center

Democrats Pound Republicans Over Their Push to Privatize and Cut Social Security. The piper must be paid. The Tea Party extremism of the modern day Republican Party is being used against them in the final push toward the midterm elections this November 4th, with Democrats pounding Republicans over their efforts to privatize and cut Social Security and Medicare. PoliticusUSA

Will This Election Be a Referendum on Privatization? – Donald Cohen. As we approach Election Day, a number of governors in tight races are finding that privatizing public services isn’t good politics. But it may be good for campaign fundraisers seeking donations from corporations that want government contracts. A new report released by the Center for Media and Democracy highlights the intensive efforts of governors seeking re-election to privatize important public services to private firms. Time after time, outsourcing has gone awry, generating worse outcomes for the public, scandals, lawsuits, and scorching headlines that are impacting the campaigns. The report includes examples from Florida, Kansas, Michigan, Ohio, Pennsylvania, Maine, and Wisconsin. Diane Ravitch’s blog

New York Educators Respond to TIME’s Cover. Once again, TIME has chosen to play the teacher bashing blame game with the rotten cover titled “Rotten Apples.” TIME is parroting the assault on public schools and teachers being promoted by hedge-fund and Silicon Valley billionaires seeking to privatize our public schools. This latest TIME cover is a head on attack on the profession of teaching. It ignores the real issues impacting quality of students’ education, resulting from the systemic inequality and severe underfunding of public schools.   TIME

PA: Philadelphia City Council Pulls Plug on PGW Privatization Deal. Philadelphia City Council president Darrell Clarke today notified the Nutter administration that City Council will not be endorsing the sale of the Philadelphia Gas Works to a private owner, effectively killing the deal. The deal needed City Council approval, but the legislation was never introduced, nor hearings scheduled. . . . “The simple reality is that there is no appetite to sell PGW as proposed by that specific, very specific proposal,” Clarke said.   CBS

IN: Indiana will not try to reclaim Toll Road. Elected officials from northern Indiana, most prominently Democratic U.S. Sen. Joe Donnelly, have urged state government to reclaim the Indiana Toll Road after its private operator went bankrupt. Not a chance, Indianapolis replied. Indiana Public Finance Director Kendra York wrote a letter back to Donnelly saying the state has no plans to reclaim the Toll Road just because the Indiana Toll Road Concession Co., a Spanish-Australian consortium, has filed for bankruptcy in a bid to sell off the 157-mile tollway after racking up about $6 billion in debt. The state wants to stick with a private operator so the Indiana Department of Transportation does not assume responsibility for the road’s maintenance.  nwitimes.com

IL: Analysis: Guilty Plea Spells Trouble For Redflex In Corruption Trial. Judge Virgina M. KendallRedflex Traffic Systems, the embattled Australian photo ticketing company, faces an uphill battle maintaining its innocence now that a key party is turning state’s evidence. On Wednesday, Martin O’Malley notified US District Judge Virgina M. Kendall that he would change his plea from not guilty to guilty at a December 10 hearing in the Chicago, Illinois red light camera bribery case. O’Malley, a Redflex contractor, was a friend of John Bills, the Chicago official in charge of the nation’s most profitable photo enforcement program. According to prosecutors, O’Malley leveraged his relationship to transfer $2 million from Redflex to Bills in return for landing and expanding the lucrative contract that ultimately earned the Australian company $126 million. O’Malley worked for Karen Finley, the head of US operations for Redflex. TheNewspaper.com

NY: State reaches for risky private equity investment for pension fund. New York State’s underfunded retirement fund is reaching for a return on investment using private equity that is riskier than its 1.06 million members may feel comfortable with. . . . The state pension plans are now 92 percent funded. That amounts to a $14.6 billion hole. Part of the problem is that the number of retirees is increasing at a faster rate than those paying into the system. DiNapoli’s challenger in the state comptroller’s race warned that private-equity investments look good now, but can turn bad very quickly. “Private-equity investments can be very risky,” says Republican Bob Antonacci. New York Post

OH: Here’s where Cincinnati City Council’s $18M surplus will go. . . And in a last minute addition to the plan, $1 million will go to the Port of Greater Cincinnati Development Authority. That money will cover the cost of winding down the failed plan to privatize city parking. Cincinnati.com