Privatization as a concept took off in the 1990s. It involves taking a service providing by government and contracting out that service to the private sector. The idea behind concept is that, by leveraging free market competition, consumers will be provided a quality service more cheaply than government can provide that service.
As a fan of privatization who watch it unfold during the Goldsmith administration, I read a number of books on the subject. One of the things cited as essential for the success of privatization is that a vendor not receive long term contracts and that there be vendors on deck ready to go should the first vendor fail to provide quality services.
Privatization as a concept has clearly lost its way. Increasingly it has become about giving monopoly, long-term contracts to vendors in order to generate up front cash. The vendor can then charge more over the term of the contract. In short, it's about politicians extracting money from the generation that will be living 20, 30 and 40 years from now.
It's not clear where privatization went off the tracks, but my guess it has something to do with the big money potential contractors pour into campaigns. One only has to look at the campaign report of Indianapolis Mayor Greg Ballard to see that it is filled with vendors who are seeking contracts from the city. A long-term monopoly contract for parking will be a plum reward for a political contributor.
This morning, the Indianapolis Star reports on the city's efforts to hand out a long-term contract to own and operate the parking meters and the city's parking garages:
The city today will take its first step toward overhauling public parking management. The effort could bring high-tech meters, extended hours and increased parking rates in Downtown and Broad Ripple.Michael Huber, the city's director of enterprise development (whatever the heck that is), goes on to offer a lot of nonsense about how the purpose of the administration's privatization effort is to look for "efficiencies" and "convenience."
Officials will put out a request in search of companies interested in operating about 24,000 public parking spaces at meters, garages and lots under a long-term contract. Those spots are owned by the city and other public entities but are mostly privately run by a hodgepodge of operators.
The goal in bundling them under one manager is to wring more money out of the assets -- through operating efficiencies, new meters and potentially higher rates -- and channel the extra revenue toward much-needed improvements to streets, sidewalks and curbs in Downtown and Broad Ripple, where the parking spots are located.
City officials won't yet say how much they could generate through the deal, but it could be tens of millions.
Let's dispense with the disingenuous Huber spin and have some straight, honest talk. This proposal by Mayor Ballard is about the administration trading the city's income flow from parking for the next 30 to 40 years for an upfront payment from a contractor (and quite likely a Ballard contributor). Parking rates will go way up and the hours for meters will be extended. The contractor will make lots of money. It doesn't matter if long term the deal is not a good one for the city. The Ballard administration gets substantial cash up front and will be long gone from office before the full impact of the deal hits.
Watch too - the Ballard administration will probably put in the contract a provision limiting or capping parking rate increases for the first few years. That will allow Ballard to escape the blame for raising parking rates during the 2011 campaign should he run for re-election.
The Indiana General Assembly needs to intervene to stop these sorts of long-term privatization contracts by local governments which mortgage the future in exchange for politicians getting cash today. In the meantime, hopefully the City-County Council will reject the Ballard parking proposal.
Photo appeared in an Indianapolis Business Journal on-line story.