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Thursday, April 24, 2014

Ind. Gov't. - "The Privatization Backlash" story in The Atlantic

From Molly Ball of The Atlantic, a long story titled "The Privatization Backlash: For decades, city and state governments have seen contracting as a cost-saving panacea. But past experience has left some of today's policymakers more skeptical." A photo of parking meters leads the story and begins with the Chicago parking meter deal. There are two references to Indiana in the story:

But some Republicans have also turned against privatization out of a desire for fiscal responsibility. In Ohio, Republican Governor John Kasich recently abandoned his push to lease the Ohio Turnpike to a private operator, deciding instead to have the state issue bonds backed by future toll revenue. The decision may have been influenced by the experience of nearby Indiana, which leased a 157-mile state road to an Australian-Spanish consortium and drew public criticism when toll rates doubled in five years. As with the Chicago meters, the government quickly spent most of its lump-sum payment and now faces decades bound by a restrictive contract that gives it little control over a major roadway.

"Privatization has potential rewards, but a lot of it is really just about shifting money around for political reasons," said Phineas Baxandall, a senior analyst at the U.S. Public Interest Research Group and author of a report on toll roads called Private Roads, Public Costs. "There are a lot of dangers in terms of loss of control over public policy, not getting enough revenue for these assets, as well as a lack of transparency." * * *

Privatization proponents say contracting horror stories are overblown. Leonard Gilroy, director of government reform for the free-market Reason Foundation and editor of its comprehensive Annual Privatization Report, noted that other cities, such as Indianapolis, followed Chicago's lead by privatizing their parking meters without a problem. (On the other hand, other cities, such as Pittsburgh, shied away from privatizing their meters.) "Is privatization a magic wand? Is it always going to come in and save you money? No," Gilroy said. "You have to do this well. You have to do your due diligence. You have to do a good contract and then you have to monitor and enforce that contract."

[h/t @urbanophile]

Posted by Marcia Oddi on April 24, 2014 09:39 AM
Posted to Indiana Government