New N.J. group cites pitfalls of privatization

TRENTON - A coalition of labor, environmental, and community groups says the weak economy is stoking a rush to privatize operations and services traditionally performed by governments, despite some well-known potential pitfalls.

The group says privatization rarely saves money, often results in inferior customer service, leads to layoffs of public workers, and invites corruption from prospective contractors. Despite all that, the New Jersey Coalition on Privatization says local, county, and state governments are pursuing privatization plans for services ranging from garbage collection and water works to animal control and park operations, in hopes of saving money.

"Turning public services over to private entities is always a gamble," Joanne O'Neill, a state coordinator for Progressive Democrats of New Jersey, a coalition member, said Monday at the group's first news conference. "Although most claim to be cost-cutting, the privatization of government services has rarely delivered on its promise."

Gov. Christie's administration is in many ways leading the renewed interest in privatization. The current state budget assumes $50 million in savings from privatizing unspecified services. Fran Ehret, who represents New Jersey Turnpike employees, says the administration is moving ahead with plans to privatize highway toll collections even after toll collectors offered $16 million in wage concessions. A 2 percent cap on property-tax increases - approved by the Democratic-controlled Legislature and signed by the governor - has rekindled interest in privatization on the local level.

The governor's office and Treasury Department did not immediately respond to e-mail messages Monday seeking comment.

Bill Dressel, executive director of the state League of Municipalities, says local mayors must have the ability to privatize services to keep down costs.

"We strongly believe privatization should be an option for municipalities to consider to reduce costs and increase efficiencies," Dressel said. "It can't be done without a deliberative process to evaluate the cost savings and the impact on the level of services."

Dressel said privatization has been used successfully on the local level, with towing services, emergency medical service, and trash collection.

Matt Shapiro of the New Jersey Tenants' Organization, which represents 1.1 million renters, is pushing to inject more accountability and transparency into the privatization process.

"We believe that when a government function is sold off to a private company that we get the same quality service by employees with equal qualifications that the government was required to give us, and that we pay no more for that service," he said. "These companies must be forced to operate in the open, in a manner visible to the ordinary citizen. All of their related documents must be available to us."

Democrats in the Legislature seem ready to support that position.

Sen. Loretta Weinberg (D., Bergen) is sponsoring a bill that sets basic guidelines for when privatization can take place, prohibiting it when cost savings are achieved through layoffs or a reduction in services or when taxpayers' costs would rise.