Public private lines blur

June 12, 1994|By David Conn | David Conn,Sun Staff Writer

The government of Maryland is being rented, leased and outright sold to the highest bidder:

The $200 million Seagirt Marine Terminal is operated by a private company that's being paid $6 million a year to do it.

Most of the financial examination of insurance companies that do business in Maryland is conducted by private companies.

Almost $200 million in annual contracts to run the state's developmental disabilities programs are held by the private sector.

Even the people who administer employment exams to state job applicants are not themselves employed by the state.

These are the fruits of an attitude that is fast gaining ground in Maryland. In an effort to improve efficiency and save money, the state is willing to consider bringing free-market forces to bear on just about anything the government does, even areas traditionally considered basic state services such as education, security and snow removal.

This effort has been spurred by the creation last year of the Governor's Advisory Council on Privatization. The council's job is to solicit ideas from companies, and encourage state agencies to look for privatization options wherever feasible -- not by selling off state assets, but rather forging partnerships with private businesses. And if those companies can make a profit, more power to them.

"What's happened in this fiscal climate is that the voters and the taxpayers . . . have said, 'We want more efficient government," said Mark L. Joseph, chairman of the advisory council, and president of Yellow Transportation Inc. in Baltimore.

"You do that by not looking at it from a protectionist standpoint of saying, 'We're going to protect the [state] jobs because they're there,' " Mr. Joseph said.

For businesses, this movement is a bonanza. The privatization council has identified more than 30 projects that were targeted for a shift to the private sector in the last year alone. Another 50 or so contracts -- some ongoing and others one-time -- are being considered, covering everything from managing the agriculture department's fleet of vehicles to running a recreation area at Fort Tonoloway State Park in Washington County.

"We heartily support it," said Gene Bracken, spokesman for the Maryland Chamber of Commerce. "Most of our members would argue, with some exceptions . . . that business can do a better job than government most of the time."

But some of the opponents are incensed. They include state administrators whose turfs may be targeted, state employees afraid for their jobs and the standard of living in their communities, and some citizens who depend on state services, whether or not they turn a profit.

They point to some recent fiascos that have eroded public trust in privatization. Baltimore County Executive Roger B. Hayden may have a tougher re-election bid because of the mixed job some private contractors did in Baltimore County snow removal. And the failure of a company to maintain security at the Charles H. Hickey Jr. School for juvenile offenders led the state to take the facility back in 1992 (the contract was later given to a second company, and the complaints have since dropped off).

Privatization will "work only if as a society we're willing to accept a lesser quality of service," said John F. X. O'Brien, executive director of the Maryland Classified Employees Association, which represents about 25,000 mostly state employees.

Mr. Joseph's response is that to a surprising degree, it's already working. His council's 1993 report on privatization tracked almost $11 billion in state spending last year (out of a total $13 billion operating and capital budget). The report found that $2.5 billion of the money detailed in the study was spent directly on private companies; and much of another $3 billion that flows to local governments and institutions also ends up in private hands.

The story is much the same across the country. Juvenile justice systems in more than a dozen states have been privatized. Some 15 percent of the nation's auditoriums and public arenas are run by private companies, including the USAir Arena in Landover. And privately built highways and toll roads are underconstruction or consideration in five states.

Private companies have made deeper inroads in some Maryland agencies than others. For instance, they received less than 10 percent of the nearly $650 million public safety operating budget last year. But close to three-fourths of the health department's $2.8 billion operating budget was spent on the private sector.

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