Gov. Chris Christie has dominated the news more than virtually any other state leader recently, with the possible exception of Arizona's Jan Brewer (because of immigration) and Louisiana's Bobby Jindal (due to the BP crisis). Yet, Christie's problems are no more profound than those facing other governors around the country. Many are on the brink of financial ruin and all are looking for answers to their fiscal problems. Christie is getting noticed because he speaks with a candor people have not seen in politicians for years and he is treating his state's problems with a boldness that demonstrates that he takes them seriously. Christie is talking about the privatization of many services.
Early in the governor's new administration, Christie created a New Jersey task force designed to identify ways the state could save money. According to the Associated Press, the panel found ways for the state to save "at least $210 million a year by privatizing motor vehicle inspections, turnpike toll booths, preschools, state parks and some services at state prisons." The five member panel put together a fifty page report detailing areas where savings could easily be found. Christie was delighted by the effort, stating in a news release, "What they have provided is a path for change that will benefit New Jersey's taxpayers through improvements in the quality of public service programs and services delivered to our citizens without placing further burdens upon the state budget, I look forward to further reviewing these recommendations."
The recommendations are far reaching and include:
· Turning over park operations to management companies.
- It suggests expanding vehicle title and registration services to private firms, which were only performing services for used cars.
- Privatize the state's four psychiatric hospitals for a potential savings of $10 million to $22 million.
- It calls for the privatization of bus routes at an estimated savings of $7.5 million in the first year alone. After seven years the projected savings should be up to $300 million.
- Instead of using state inspection stations for cars, the report suggests that drivers pay for emission tests at service garages. The estimated annual savings would be $28 million.
- Have a private company take over cash toll collections for the New Jersey Turnpike Authority. This agency operates both the Turnpike and the Garden State Parkway. This private firm would convert to a fully automated collection system with the potential of saving of up to 50 percent compared to the current government agency.
- Privatize prison services, including the medical, food, and educational needs of inmates.
- Utilize private providers to run preschool programs.
- Instead of government agencies handling workers' compensation claims and career needs, the panel proposed turning these services to a private company.
In a very typical "knee jerk reaction," the Speaker of the New Jersey Assembly, Sheila Oliver (a Democrat) has been critical towards the idea of charging fees for car inspections that are currently "free" if done at Motor Vehicle Commission facilities. This is at the heart of the problem, there is nothing "free" if it requires government dollars. This service is being paid for through taxes, when a strong argument could be made that only vehicle owners should pay for such services. When they are done through private firms, it is typically at a more competitive price.
Privatization is beneficial on many fronts. For one thing, it restores competition when in comes to government services, which naturally will drive prices down as companies compete to be the provider of those services. Furthermore, since private companies cost significantly less than government agencies when it comes to paying employees, that savings is passed on to taxpayers. For example, USA Today notes that the average government "employee earns an annual salary almost 60% higher than the average private-sector employee — $79,000 vs. $50,000. Federal employees do have more education (on average) than private-sector workers. Their unions argue that this justifies their higher pay. But it doesn't. Even after controlling for education and experience, federal employees get paid significantly better — 22% more per hour, on average — than private-sector workers." The average cost per New Jersey employee is comparable to the federal governments (according to columnist James Allen who noted it was approximately 45% higher than the private sector), which means a huge saving for the state if these services were done through privatization. A savings of $210 million would make the Garden State a much more attractive state for the people of New Jersey and would further enhance Chris Christie's reputation as a leader who can be taken seriously.
