Read the full report
In the Public Interest’s new report, “Out of Control: The Coast-to-Coast Failures of Outsourcing Public Services to For-Profit Corporations,” can be found at www.inthepublicinterest.org
The private company running the water system in Jenkinsville, a tiny Fairfield County town, was cited as one of the poster children for governments’ making poor deals to privatize public services.
In the Public Interest, a Washington-based nonprofit, released a report Wednesday that criticized more than a dozen contracts and privatization deals across the country.
The report noted that the Jenkinsville Water Company failed to pay state employee payroll taxes, lost millions of gallons of water, and could not account for more than $20,000. When residents and journalists submitted a Freedom of Information Act request a few years ago, the company refused to comply. S.C. Attorney General Alan Wilson advised they had to, but the company has refused.
That lack of transparency is just one type of problem that can tarnish a government’s decision to hire a private company to provide a public service, said Donald Cohen, executive director of In the Public Interest.
However, the report cited examples from New England to California, and Cohen said the issue does not have a partisan or regional theme.
“There’s been a general feeling, a general popular wisdom, that the private sector does things better than government. It’s just not true. There are businesses that do things well, and there are businesses that do things poorly with waste. There are governments that do things well. There are governments that do things poorly,” he said. “That’s not the issue. The issue is how we manage.”
Dr. Janice Fine, a labor studies professor at Rutgers University, said for-profit corporations often promise taxpayers to run public services better, faster and cheaper than government can, “but I can tell you many of these promises end up unfulfilled.”
There was no other South Carolina example cited in the report, but there were a few others in the South.
The report noted an October 2013 Palm Beach Post investigation examined the costs of running private and public prisons from 2009-2012, using figures from the Florida Department of Corrections. It found that four of the state’s six privately-run prisons failed to meet a state requirement that they achieve at least a 7 percent cost savings for taxpayers. Three saved no money at all.
In Virginia, a long-term state contract penalizes Virginia taxpayers for increased carpooling on its high-occupancy express toll lanes around Washington.
The report noted if carpoolers in these lanes exceed 24 percent of the traffic, Virginia has to reimburse the contractor — unless it already has made $100 million in profits, “even though carpooling accomplishes important public goals of cutting commute time and reducing pollution and congestion.”
The report concludes with advice to government of how to ensure these contracts properly deal with transparency, accountability, shared prosperity and competition.
“We’re not against government contracting,” Cohen added. “It’s been done since the beginning of time. It will continue to be done. We just want it done well.”
Reach Robert Behre at 937-5771.
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