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Three More States Seek to Curb Reckless Outsourcing of Public Services, Protect Taxpayers

CA, GA, OK introduce bills promoting accountability and transparency in deals to outsource public services to for-profit corporations.

CA, GA, OK introduce bills promoting accountability and transparency in deals to outsource public services to for-profit corporations
Washington, DC – Legislators in California, Georgia, and Oklahoma are joining a national movement to reign in reckless outsourcing of public services to for-profit corporations and private entities, introducing bills that would keep taxpayers in control of their public services by increasing transparency and accountability standards for outsourcing deals.
“The job of lawmakers is to protect and serve residents and taxpayers, not give cover to corporations looking to maximize profits by cutting corners,” said Donald Cohen, Executive Director of In the Public Interest Action Fund. “In the Public Interest applauds these commonsense measures and the lawmakers who are standing up for taxpayer control of their schools, roads, and prisons.”
In California, Assemblymember Richard Pan has introduced three bills to strengthen protections for Golden State taxpayers. AB 1574 would ban language in contracts that guarantees payment for services not provided. This provision is particularly important in the use of private prisons. Last year, ITPI found that 65% of state and local private prison contracts include “lockup quotas”– language that mandates that prisons be filled to at or near capacity, or else force taxpayers to pay for empty beds. AB 1574 would ban these types of contracts, while also banning contract “noncompete clauses” aimed at guaranteeing profits for private entities. Assemblymember Pan also introduced ABs 1575 and 1578, which would increase transparency and accountability.
In Georgia, Representatives David Wilkerson and Dewey McClain are proposing a measure that would require outsourcing bids to guarantee 10 percent cost savings. Similarly, Reps. Scott Holcomb and Brian Prince are proposing a measure that would make it easier for taxpayers to cancel contracts if outsourcing deals do not deliver on promises of quality and cost savings. Reps. James Beverly and Wayne Howard have proposed a measure that requires any company receiving tax dollars for outsourced services to comply with the same open records and meeting laws as public agencies.
In Oklahoma, a state that has also seen extensive use of “lockup quotas” in prison contracts, Senator Connie Johnson has introduced three bills (SBs 1640, 1641 and 1642) which increase transparency and accountability. Just as in Georgia, Sen. Johnson’s proposals require companies that receive tax dollars to run public services to open their books and meetings to thepublic, just as government does. Sen. Johnson’s bills also require the hiring of adequate oversight personnel for new contracts, as well as a full online database so that taxpayers can track whether outsourcing deals really are saving them money.
California, Georgia, and Oklahoma join Nebraska, Vermont, and West Virginia amid increased nationwide scrutiny of outsourcing deals, many of which have had disastrous unintended consequences for taxpayers. For example, in 2009 Chicago signed a 75-year contract with a consortium of companies backed by Wall Street giant Morgan Stanley for the operation of the city’s 36,000 parking meters. Though Chicago got $1.2 billion in the deal, Chicago drivers will pay the private companies at least $11.6 billion to park at meters over the life of the contract. Meanwhile, upon signing the contract, the company dramatically increased parking rates to $7 for two hours of parking in some parts of the city, and extended paid parking to seven days a week. Downtown businesses blamed the price increases for a decrease in economic activity. Residents complained that parking downtown was cost prohibitive. And taxpayers must reimburse the company whenever the city needs to temporarily close its streets, even for community parades and street fairs.
Across the country, cash-strapped state and local governments have handed over control of critical public services and assets to private entities that often operate them slower, costlier, and worse. Too often, these “deals” leave behind only broken promises and undermine transparency, accountability, shared prosperity, and competition. ITPI documented several of these broken promises in its recent report, “Out of Control: The Coast to Coast Failures of Outsourcing PublicServices to For-Profit Corporations.”

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