Privatization Updates from Around the Country

This week's Update:

Update: Upcoming Privatization Issues. September 24, 2012

1) National: Republican Vice Presidential candidate Paul Ryan is “booed and heckled” at AARP meeting “as he laid out the Republican ticket’s case for repealing President Barack Obama’s healthcare law and partially privatizing the Medicare health plan.” President Obama says GOP plan to privatize Social Security is “an ill-conceived idea that would add trillions of dollars to our budget deficit while tying your benefits to the whims of Wall Street traders and the ups and downs of the stock market.” The privatization issue is also generating debate in Congressional races.

2) National: New film advocating “parent trigger” laws that enable school privatization is analyzed by Center for Media and Democracy. “While Parent Trigger was first promoted by a small charter school operator in California, it was taken up and launched into hyperdrive by two controversial right-wing organizations: the American Legislative Exchange Council (ALEC) and the Heartland Institute.”

3) National: Former Manhattan District Attorney Robert Morgenthau weighs in against for-profit immigration detention. Writes that “even as [the American Legislative Exchange Council] does the lobbying work for the for-profit [Corrections Corporation of America], it claims nonprofit, tax-exempt status; lobbying is heavily restricted for tax-exempt organizations. When CCA bankrolls ALEC, it claims the payments as a deduction from its taxes, just as you do when you give money to the Red Cross. I’d call that a case of perverse incentives: Our tax dollars subsidize lobbying for bad immigration and corrections policies. The corrections industry makes the profit and gets a tax write-off—and taxpayers foot the bill. Fortunately, where a perverse incentive creates bad policy, there is always a simple solution: eliminate the incentive. I will leave it to the IRS to determine whether ALEC is being honest when they claim they do no lobbying. In the meantime, immigration authorities should simply stop doing business with for-profit jails.”

4) National: Kent Rowey, the Freshfields Bruckhaus attorney who advised Morgan Stanley Infrastructure on the controversial Chicago parking system privatization, joins the law firm Allen & Overy’s energy and infrastructure practice. Earlier this year, Allen & Overy warned its clients about growing political opposition to privatization and road tolling in Congress and urged them to take action against it. [Sub required]

5) National: Take Part reports on price gouging for phone services in prison. “Through CCA’s privatized phone system, a five-minute call with her grandson could wind up costing upward of $18.” [Wright to Call Home campaign. “Our communities urgently need federal oversight of interstate prison phone call rates.”]

6) National: Federal Bureau of Land Management plans to privatize its burros. “The animals remain property of the federal government for the first year after adoption, but then you can apply for a certificate of title to privatize your burro.”

7) California: Legal tangle over Costa Mesa’s effort to outsource public services has wide implications for privatization across the state. City says a court decision enables it to outsource; Costa Mesa City Employees Association attorney says it “clarifies that general law cities and counties cannot contract with private entities to perform municipal functions except under a narrow set of circumstances, such as when such contracting is specifically permitted by law or when the services would involve certain specialized skills that civil service employees do not possess.”

8) Florida: In a major public insourcing of a privatized water utility, Aqua Water is to sell all of its Florida water and sewer systems to the Florida Governmental Utility Authority. Food & Water Watch says “the community groups and volunteers of Florida FLOW, local organizers and residents should be congratulated for this victory and for dealing a powerful blow to water privatization in Florida. (…) It remains to be seen if Aqua Florida will negotiate a sale price in good faith or continue to stonewall the four year effort of residents to secure safe, affordable water.”

9) Georgia: As referendum on charter schools approaches, both sides gear up for battle. “Georgia is now in a frenzy over a charter school amendment that will do nothing to dramatically alter school transformation. Millions will be spent in the battle, a fair share coming from for-profit education companies that see Georgia a potential new market for their wares.”

10) Georgia: Northwest Corridor “public private partnership” transportation project financing plan approved by state transportation board. The managed lanes project will be supported by tolls, and an equity investment for the design-build work will be provided by private finance. The state will provide $536 million of the estimated $950 million cost. A request for proposals is expected in December 2012.

11) Illinois: Following tentative settlement of the Chicago teachers’ strike, longer-term issue of school privatization remains. David Moberg writes “the bigger battles ahead include fights over CPS’s plan to close 80 to 200 schools and open more charters, fair funding for the schools, proper implementation of the contract and much more. Meanwhile, the national American Federation of Teachers (with which CTU is affiliated) has already had some success with a parallel, ongoing effort to organize more charter school teachers.”

12) Illinois: Illinois Department of Child and Family Service workers rally to defend Intact Family Services program, which monitors up to 5,000 families. Associate Director of AFSCME Council 31, Mike Newman, says Gov. Quinn’s cuts to the program threaten workers, families and children. Progress Illinois says “as the state looks towards privatizing the work of Intact Services to save money, some workers who are facing a layoff say that decision could lead to many abused and neglected Illinois children falling through the cracks of the system.”

13) Louisiana: Editorial in Gannett Daily World says “exemption to open records law is an outrage. (…) A suit filed by the Monroe News-Star, one of The Daily Advertiser’s four Gannett sister papers in the state, asked for documents pertaining to the school voucher program. That matter is unresolved. [Gov. Jindal’s] making a law that circumvents the state Constitution and the state’s older ‘Sunshine Laws’ violates, if not the letter, then certainly the spirit of the law.”

14) Louisiana: In a new book, John Arena examines the role of nonprofits in promoting housing privatization in post-Katrina New Orleans. [Review]

15) Michigan: Detroit Mayor Bing’s proposal to privatize the city’s department of transportation remains in limbo as the city council “demands details.”

16) Mississippi: Gautier city employees and residents ask city council to reconsider a proposal to privatize public works and utilities services. “City employee Al Stanton said he’d ‘earned the right to be here’ after his years of service with the city. ‘You should do whatever you need to do to save people’s jobs … people who have been here 15 years or more.’” Council is scheduled to vote on September 24.

17) New Jersey: Woodbridge school district cafeteria workers, whose jobs were privatized to Chartwells three years ago, fight for improved pay and working conditions. “[Cafeteria worker Paula] Madsen and her fellow workers joined SEIU last August, with the intent of trying to get back some of the salary and benefits they lost when Chartwells became their boss. SEIU is a union that represents janitors and food service workers in New Jersey, said SEIU spokeswoman Maia Davis. They’ve been in negotiations all summer long, Madsen said. ‘We’re getting nowhere.’”

18) New Mexico: In the wake of a fake auditing scandal at the New Mexico Finance Authority, lawmakers say they will resist efforts to dismantle the development agency. Rep. Luciano Varela (D-Santa Fe) says Gov. Susana Martinez’ (R) plan to end a tax revenue earmark for the agency is “a ‘radical change’ that could privatize much of the authority’s financing work.”

Gov. Martinez has also teamed up with the politically well-connected for-profit University of Phoenix to offer a 10% discount to state workers seeking higher education, despite the fact that the private university costs “more than double what New Mexico’s most expensive public schools charge. (…) It doesn’t look so good that the state’s partnership follows a $5,000 donation from University of Phoenix’s parent company, the Apollo Group, that ended up in the account of Susana PAC, Martinez’s political action committee.”  [Sub required]

19) New York: Pro-privatization Reason Foundation’s Shirley Ybarra pushes for Tappan Zee bridge renewal project to turn into “public-private partnership.” The project is being developed through public procurement, and the PPP option has been rejected in the past by state officials. Ybarra was speaking at a meeting including construction industry figures and several local politicians. Another pro-PPP meeting will be held on October 11. Gov. Cuomo announced the appointment of a design review team for the project last week.

20) New York: Nassau County budget control board delays wastewater privatization project for at least a year. “[County Executive] Mangano so far has failed to persuade state overseers that a public-private partnership for the sewer and wastewater authority will help solve Nassau’s long-term financial problems. Some members of a state control board, created in 2000 to prevent Nassau from going bankrupt, said last month they would reject any budget that included a sewer authority deal because it would only provide nonrecurring revenue.”

21) New York: Niagara County sheriff’s office to privatize medical services for the county jail to Florida-based Armor Correctional Health Services, Inc. In a recent Florida case in which a family is accusing the Sarasota sheriff’s office of ignoring an inmate’s health complaints for days before she died, the family’s attorney told the Sarasota Herald-Tribune that “what I found out was she was complaining that her legs were paralyzed and she couldn’t walk … They were thinking she was faking.” The attorney “said nurses and doctors provided by Armor Correctional Health Services decide when an inmate needs to go to the hospital.”

22) Ohio: Portage County considers privatizing its recycling program. The plan “must be ratified by the townships and municipalities in the county before it goes to the state Environmental Protection Agency for final approval.”

23) Texas: Federal Highway Administration gives environmental clearance to the $1.3 billion I-35W reconstruction and expansion “public private partnership” project in Fort Worth. The attorney general must approve the PPP’s “legal sufficiency.”

24) Virginia: Critics target state’s contract with Transurban on Interstate 95 High Occupancy Toll lane project for noncompete clauses, concessionaire compensation. “The state of Virginia executed a contract with an Australian company on July 31 designed to discourage ride sharing and ensure congestion on major commuter routes until after the year 2085. A cleverly worded ‘non-compete’ provision buried in a massive contract document puts taxpayers on the hook for paying monetary damages to toll road operator Transurban if the state decides within the next 73 years to expand the free lanes on Interstate 95, improve the highly congested Route One corridor or make driving easier on the Occoquan Bridge.” [HOT Lanes contract]

25) Virginia: Virginia Port Authority to hold public hearing on October 4 in Norfolk to get input on plans to privatize the state’s ports. Additional “community engagement” events are also being planned. Tensions continue to mount over the proposal. Virginia Maritime Association executive vice president Arthur W. Moye, Jr., told a legislative hearing that “before the commonwealth considers privatization, any specific problems at the port should be formally identified and recommendations should be made as to why privatization is the appropriate solution to those specific problems. The current process is moving at an unprecedented pace and lacks stakeholder support.”

26) Washington: Seattle Education blog looks at issues surrounding Initiative 1240, a proposed November ballot measure to set up charter schools in the state. Commenter replies, “My daughter-in-law is a charter school teach in Tucson Arizona—as it was the only job she could get as public schools are closing and they are laying off public teachers due to lack of funding. She get paid only $9 an hour—she is expected to work 10 or so hours (with no overtime)—clean her classroom (as the owner of the charter school does no want to hire a janitor—’too expensive’) AND charter School teachers are not covered by a Union.”

27) International:  Another major privatized toll road in Spain goes bankrupt. Cannot make a €575m debt payment due this month on a Ferrovial-Sacyr-Caja Castilla-La Mancha managed road. “Put simply, the R-4 has been felled by a combination of lower-than-expected traffic and higher-than-predicted land expropriation costs.” [Sub required] Bailout options raise hard political issues: “Some voices talk about tolling free highways in order to cash up the money to pay those 3 billion. Probably that would be a solution in case revenues from filed [Special Purpose Vehicles] would not be enough to cover [operations and maintenance] costs, but if [operations and maintenance] costs are covered, and the problem is the repayment of debt, the idea of tolling free highways to pay for past errors seems difficult to explain from a social point of view.”

28) International: Over 100 firms flock to bid on $22 billion of private road concessions in Colombia. The projects will be supported by government subsidies. [Sub required] The launch of the program was announced by the president of Colombia’s National Infrastructure Agency, Luis Fernando Andrade Moreno, who is a former director general of McKinsey’s Colombia division (pp. 13, 20).

Legislative Issues:

1) National: Rep. John Mica (R-FL) redoubles effort to privatize Amtrak. Is planning at least three more hearings for the lame-duck Congressional session later this year. “Amtrak’s subsidies by and large support the long-distance routes, which Congress mandates as a public service. It can’t very well require Amtrak to run these money-losing (but important) long-distance routes and then cut the money to run them—yet that’s what Mica proposes to do. Outsourcing wouldn’t work because no private company would want to take on routes that are proven to lose money. Maybe that’s why Mica’s privatization plan centers on the lucrative Northeast Corridor—the one place Amtrak does make money.”

2) Florida: Palm Beach Post editorial says “the legislature will not be in session until March, but already the signs point to another battle over whether to privatize South Florida’s state prisons.” Urges lawmakers to “make prison privatization a three-time loser.”

3) New York: State Sen. Greg Ball (R-Patterson) announces he plans to release draft legislation soon on “public private partnerships” in the state.

4) Texas: Efforts to stop the privatization of the Kerrville State Hospital continue as the proposal “reaches the final stages of review before being sent to the Legislative Budget Board.” Grassroots Leadership executive director Bob Libal asks the Legislative Budget Board, “If you’re going to cut more than 10 percent out of the hospital, where are those cuts going to come from?” Decision is likely by the end of this week. [Report on Geo Care, which is bidding for the hospital]