Privatization on the Rise Despite Surpluses - Reason Public Policy Institute report - Brief Article

USA Today (Society for the Advancement of Education), August, 1999

While state and local governments across the nation experience budget surpluses averaging between eight and nine percent of their expenditures, privatization continues to advance at all levels of government, according to a report by Reason Public Policy Institute (RPPI), Los Angeles, Calif. Despite the assumption that it is little more than a remedy for cash-strapped governments, solvent governments continue to tap into privatization for other benefits such as superior management and specialized expertise.

"Historically, privatization has happened in the shadows of budget axes and shortfalls, when governments must make every penny count. In many ways, this is changing. Privatization is growing at a vigorous pace despite surplus-heavy budgets because it is providing far more than simple savings," explains Adrian Moore, director of RPPI's Privatization Center and co-author of the report.

"Many governments recognize that the private sector is their best option for achieving strategic goals, such as ensuring that the millennium bug doesn't bite their computers. In other cases, like the privatization of recreational facilities, governments realize that they can't run a ski resort as well as companies specializing in those areas."

Despite the growing interest in and application of privatization at the local, state, and Federal levels, fierce political opposition continues to make outsourcing an uphill battle. In a variety of areas, legislation has been proposed to eliminate or substantially restrict the ability of governments to seek private-sector assistance in areas such as prison management, architectural services, and fire protection. Despite such maneuvers, Moore sees the wave of privatization continuing into the new millennium as the public expects higher-quality service at low prices. "The fact is, the voting public is increasingly sensitive to the quality and cost of government-delivered services, encouraging governments to seek out innovative ways to serve the public. Increasingly, privatization is the order of the day, surplus or deficit."