2014 Bills

SJR5: Privatization as a Last Resort, If Ever

This resolution was not considered. Visit our Legislative Index to see the final vote rankings for the 2014 general session.

Libertas Institute opposes this resolution.

Over the past year we have attended each meeting of the Free Market Protection and Privatization Board—an entity created by the legislature to eliminate unfair competition by the state and to assess what government services might be privatized.

As we have noted previously, the cost metric for determining whether privatization should occur is flawed; in addition to privatizing things when it can save taxpayer dollars, the state should also privatize (in other words, cease to offer) services in which it should not be involved.

This poor understanding of the proper role of government is reflected in Senate Joint Resolution 5, sponsored by Senator Karen Mayne (a member of the above-mentioned board). As the description states, this resolution would have the legislature recognize “the value of privatization of government services in some circumstances and urges that decisions to privatize be conducted only after thorough and careful review to ensure that privatization is in the public’s best interest.”

The resolution notes that “there are circumstances in which it is appropriate for the state to choose to privatize a government service”—but does not suggest what those circumstances might be—but also states that “all alternatives to privatization should be explored and thoroughly evaluated prior to any decision to privatize.” In other words, this resolution suggests that privatizing anything is a last resort—an action to be taken only after all other options involving the state are ruled out.

The process for determining whether this last resort is an option should, the resolution states, “be productive for both government and the private sector,” whatever that means. But worse, the state’s graciousness in privatizing one of its many services should still “include government oversight to ensure that the privatization of services is operating effectively and efficiently.”

Of course, if taxpayer dollars are being funneled to private contractors—if that’s how “privatization” is being (wrongly) defined—then it makes sense to provide oversight and ensure, as the resolution states, that it is “in the public’s best interest.”

But if privatization is understood to be what the word means—turning ownership, responsibility, and control over to private individuals instead of state agencies—then this resolution is misguided in its attempt to ensure that privatization rarely be considered and only when the government casts a watchful eye over the reluctant relationship.

This board collectively believes that privatization involves mere outsourcing. Transferring a project from an employee to a private contractor, while retaining the same funding, responsibility, state oversight, and control, is not privatization. At best, it is merely streamlining.

If a privatization board is to exist, then it must be constituted and commanded to focus on more fundamental questions, such as: should the state be doing X at all? Only then will conversation be fostered that might lead to actual privatization. Until that time arrives, expect little from the board that might actually protect the free market. As Senator Mayne’s SJR5 makes clear, the board’s focus thus far has been with little regard for what any free marketeer might recognize as actual privatization.