GUEST COLUMN: It’s better to do it ourselves

January 30, 2017 GMT

“The ideological fervor for privatization has ebbed.”

Dr. John Donahue, Harvard Kennedy School of Government

Recently, three Rome civic organizations that have traditionally used a dining room in The Forum River Center for events devoted to building up our youth and improving Rome and Floyd County have found themselves unable to afford the minimum $2,500 rental rate instituted by the private company controlling our downtown civic center.

Administration of The Forum has been released to a private firm. The short-term contract specifies citizens pay a management fee to the firm, operations cost and maintenance, transfer a cash reserve to the company, and make capital improvements through SPLOST.

The management firm takes over employees, liquor licensing, insurance associated with serving alcohol, establishing rental charges and other fees, as well as event scheduling.

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A 25-year track record on privatization of city, state, and federal public services is readily available in newspapers; the results are mixed to say the least.

In the 1990s, municipal contracting with the private sector was thought to cost less and improve quality. The public sector was viewed as costly and hidebound. Long-term leases (50 to 75 years) of public assets — parking meters, water systems, libraries, emergency response — to for-profit firms seemed to make sense. Privatization was the answer to reducing expenses and generating revenue for public budgets without raising taxes.

Frequently, neither of these anticipated results materialized. The typical outcome was increased costs to residents and lower service quality. Town officials lost decision-making power over vital public assets and future development decisions; they found themselves in budget trouble, and engaged in expensive, protracted legal battles.

Privatization of public assets and services produces four results destructive to local communities. The first is the loss of decision-making power about issues that impact the well-being of all citizens — water quality, road expansion, and education. Privatization always involves citizens turning over the running of their town to an absentee corporation.

Secondly, even if privatization defers taxes, it always results in increased service rates and extraneous fees. A not-so-obvious expense of privatization is the loss of living wage jobs.

For-profit management companies are more likely than the public sector to lower wages. Employee salary and benefit elimination is the primary source of expense reduction. But, there is a cost.

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Third, quality deteriorates. These types of contracts are often labeled “3P”, public private partnership, but more accurately they are “4P,” public private profit partnership. With no accountability or requirement for financial audits to local government, oversight of private contracting firms withers. Quality is out the window when profit is at the door and elected officials find themselves limited under the negotiated contract when problems arise.

Finally, public service privatization generates excessive social and economic inequality. Doubled or quadrupled water bills make income important for access to public services like clean water. Low wage, middle class citizens and seniors find themselves choosing between water, rent, or medical care; they are excluded by unaffordable charges from the community.

If it were only a matter of expensive clothes, trips and houses, moderate inequality is not such a corrosive force; but, as higher charges put water, safety, and education out of reach of ordinary citizens, our social compact fractures.

Some things are worth paying for. A livable, productive, democratically controlled community falls in that category.

Privatization of public assets undermines those characteristics. A modest tax increase (on those who can bear the burden without loss of necessities) would be less expensive than the increased charges and loss of control over Rome and Floyd County’s future imposed by absentee corporations. A modest tax increase would be less costly to our community spirit than a civic center operated a profit-seeking private firm.

That tax increase would be well worth the retention of Rome’s independence.

There are plenty of newspaper accounts of the consequences of privatization gone awry:

Jenkinsville, South Carolina’s sale of their water system

The public record of American Water Company’s performance in West Virginia

A sweetheart deal igniting North Carolina’s recent debate over privatizing portions of I-77

Ohio Gov. John Kasich’s decision to kill a proposal to privatize portions of Ohio’s roads

The debacle of doubled tolls imposed by an Australian-Spanish firm on Indiana’s roads

Rome and Floyd County’s future will be determined in large part by citizen willingness to invest in doing it ourselves rather than relying on absentee expertise and capital.

Michael Reynolds, a Rome resident retired from Georgia Tech, is a graduate of the School of Theology at Boston University. He writes for the website MOVE GEORGIA FORWARD and may be reached at MoveGeorgiaForward@gmail.com.