Privatization Shoe Drops – Christie Expands War on the Public Sector

[Update 3 – 7/18/20 – Philly Inquirer editorial gets it: This road looks familiar]

Update 2 – 7/12/10 Surprise, surprise! The beat goes on! Today’s Star Ledger reports: Gov. Christie seeks scaling back pensions, health benefits for N.J. employees

Update 1: 7/11/10 – today’s Star Ledger story by Brian Murray nails it: N.J. environmental groups slam state for mismanaging private vendors at state parks:

TRENTON – A task force report recommending New Jersey let private vendors run all 58 state parks met with controversy last week even before it was released, as audits circulated by environmental groups showed the state continues to “mismanage” 236 contracts already held with private entities operating on public lands.

The state Privatization Task Force, formed by Gov. Chris Christie, concluded the state Department of Environmental Protection could save “approximately $6 million to $8.2 million” by letting private companies manage state parks.

But for more than a decade, the DEP has mismanaged lease agreements and contracts, including failing to collect payments, by which public lands and facilities are operated and used by private entities, according to audits released in 1997, 1999, 2004 and last December by the Office of Legislative Services. […]

“Even during a time of fiscal emergency, when the parks are starved for cash, DEP has shown no ability to manage current leases and contracts. As a result, the taxpayers and the parks visitors both lose. … At best, privatization is unproven and has had a scandalous past in New Jersey,” said Bill Wolfe of Public Employees for Environmental Responsibility.]

(click here for a copy of the Report)

I was going to write today about the real estate appraisal I obtained that DEP claims was the basis for a sweetheart state park land lease deal with Texas based industry giant Tennesse Gas Pipeline Co., but  today’s news forces me to shift gears to another important issue.

Ironically, today’s more important topic is closely related to the serious underlying policy and management flaws exposed by the Tennessee Gas deal.

Three weeks ago (BEFORE we learned about the Tennessee Gas deal), we noted the erie silence during state budget negotiations on the overdue Report on privatization, mandated by Governor Christie’s Executive Order #17. The Report was due May 31, and Christie’s budget assumed $50 million in savings (see: “All quiet on the Privatization Front“)

Well, it looks like that shoe has dropped – according to today’s Star Ledger, the Christie Report goes far beyond Christie’s $50 million savings goals and says privatization can save $210 million annually: Christie administration recommends massive privatization of N.J. services

TRENTON  – New Jersey would close its centralized car inspection lanes and motorists would pay for their own emissions tests under a sweeping set of recommendations set to be released by the Christie administration today.

State parks, psychiatric hospitals and even Turnpike toll booths could also be run by private operators, according to the 57-page report on privatization obtained by The Star-Ledger. Preschool classrooms would no longer be built at public expense, state employees would pay for parking and private vendors would dish out food, deliver health care and run education programs behind prison walls.

All told, the report says, New Jersey could save at least $210 million a year by delivering an array of services through private hands.

We haven’t read the Report yet, but are shocked that Christie was dumb enough to revive the Whitman Administration’s boondoggle with the Parsons contract for the car inspection program.

Read the State Commission of Investigation (SCI) Report (click here) for the story on the Parsons contract fraud.

SCI documents that NJ taxpayers were ripped of by more than $300 million and the system didn’t work. Political insiders and corrupt Whitman cronies ignored expert recommendations and warnings. As a result, Parsons gorged themselves at the public trough (guess it’s no coincidence that Christie moved to kill the SCI see: Christie puts leash on public watchdog )

The Privatization Report follows our disclosure of a recent Office of Legislative Services Audit that revealed that DEP is unable to collect millions of dollars of  rents owed at State Parks and capture the current market value of leases and easements across  state lands. (see: Star Ledger story”Audit Shows that public land leases to private firms continue to  trouble NJ” .

PEER disclosures that broke that story: NEW JERSEY FORFEITS MILLIONS ON PARK LEASES AND CONCESSIONS –  Lapsed Leases, Below Market Rates and Sweetheart Deals Give Corporations Breaks)

Given these historical failures and the fact that serious policy and management problems at DEP remain unresolved, how can even more DEP programs and State Parks be privatized?

IF DEP doesn’t even have a list of all leases and concessions and can’t collect the rent from highly profitable corporate gas pipelines across state parks, how are they going to manage more complex contracts from less profitable businesses?

And then there is the major unknown lurking – a likely fiasco brewing – in the privatization of the DEP toxic site cleanup program by the Legislature just last year. Evaluation results of the LSP program are not yet in, but glaring conflicts of interest and other problems in the design of the “Licensed Site Professionals” program (and early poor performance results) have bright red and yellow lights flashing, suggesting major disasters and corruption on the horizon.

We will do a detailed review after we get a hold of the Report.

My initial sense is that this is “free market” ideology and corporate cronyism run riot.  More to follow.