Go Slow on Privatization

January 02, 1993

Advocates of quickly selling off chunks of state government to the private sector won't like what the Maryland Task Force on Privatization concluded last month. The panel urged Maryland not to get caught up in the privatization fad but instead start an on-going assessment of state programs that holds the potential for long-range reforms.

The group, headed by former transportation secretary William K. Hellmann, was leery of the Lockheed-Westinghouse proposal to take over management of BWI Airport. Too many unanswered questions. Will privatization lead to vastly higher landing fees for the airlines? Can Lockheed operate such a big airport? No other major airport in the U.S. has been privatized.

Instead of rushing to sell off state operations -- a move officials, and the public, could soon regret -- the Hellmann task force suggests a fundamental shift in how state government views itself. Under this approach privatization issues would be institutionalized in an annual evaluation process.

Government leaders should no longer think in bureaucratic, self-protective terms, the task force said, but rather in terms of what is most efficient. Every year at budget time, each agency should evaluate privatization opportunities as an alternative to taxpayer support. And every new initiative should be evaluated to see if the private sector can perform the same task cheaper or more effectively.

A new Advisory Council on Privatization would oversee this process, which would be conducted by the state budget department. This is a pragmatic mechanism that could turn idealistic rhetoric about privatization to reality.

The panel lists 58 areas that could be studied immediately for possible spin-offs. Among the most exciting: Privatizing two chronic-care state hospitals on the Eastern Shore and in Western Maryland; converting the Maryland Environmental Service into a separate, quasi-public authority to operate water supply and waste treatment facilities; merging the Northeast Waste Disposal Authority into MES, and spinning off the state's airport and port operations and the state toll operations into a quasi-public authority.

This last suggestion is especially exciting. The port and the airport face fierce regional and international competition. An independent authority would free air and port officials from onerous red tape and let them run their agencies more like private businesses. The spin-off also would transform the Department of Transportation into a more narrowly focused agency devoted to highways, motor vehicles and mass transit.

Privatization, the task force concludes, is not a panacea for government deficits. It is, though, "a viable alternative to conserve scarce public resources." But only if each opportunity is carefully evaluated to ensure the public's best interests are safeguarded.

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