Californians Love Taxes, Not Government Reform

March 29 (Bloomberg) -- A funny thing happened after California officials announced the shutdown of 70 state parks in the face of an estimated $33 million in budget cutbacks: Private companies, wealthy donors, nonprofit organizations and local governments came up with ways to keep many parks open.

Eleven parks have already been dropped from the closing list, and the parks agency is holding workshops to teach community groups how to run a state park.

Unfortunately, such creative solutions -- where government officials privatize services or find other ways to stretch the taxpayer’s dollar -- appear less likely as Californians express support for tax increases.

In a new state poll, 64 percent of those surveyed are behind Governor Jerry Brown’s plan to “temporarily” boost the state sales tax by a quarter cent and impose a new surcharge on people earning more than $250,000 a year.

With more money coming in, politicians will have no stomach for reform. As former Governor Arnold Schwarzenegger’s top pension adviser, David Crane, warned recently in the Sacramento Bee, referring to the state’s unfunded pension and health-care liabilities, “a tax increase in the absence of reform would mask those problems, leading to even larger leakages down the road and even greater degradation of services.”

Regarding the parks, Governor Brown and his fellow Democrats promoted the Washington Monument Syndrome, which refers to the way the federal government, when faced with budget reductions, shuts down the monument to annoy tourists and strong-arm taxpayers into giving them more revenue.

False Choice

Brown has based his entire program on that approach. He keeps frightening voters with his tiresome false choice: higher taxes or fewer services.

The governor has shown little interest in reforming programs beyond some superficial tweaks -- such as cutting a few commissions, or restricting state employees’ mobile phones -- but he often prattles on about what it will mean when government has to do less. At a speech to county officials last summer, he said that if voters refuse to grant tax extensions, “we will get a radical restructuring of what we are.”

But the thing that needs a radical restructuring is a state government that puts the interests of those who work for it above the provision of services to the actual public.

Privatization -- for state parks and other sites, or for prisons and roads -- is by no means a cure-all when government budgets hit the wall. But it is one option that is rarely considered these days, especially in California, where the powerful public-sector unions have been championing legislation that takes any outsourcing possibilities off the table. The unions have focused on some failed privatization experiments, but they never mention the success stories or the common failures when the government provides services.

Last year, for instance, Brown signed a law intended to stop local libraries from outsourcing their operations to a private contractor. The Library Journal reported that the measure was aimed at a Maryland-based outsourcing company, Library Systems & Services LLC, which “operates libraries in Camarillo, Moorpark, Redding/Shasta County and Riverside County.”

The Legislature often proposes union-backed measures that restrict private alternatives in various areas of state government, including professional engineering services, information-technology contracts and the like.

At the local level, some Southern California cities (including Ojai, Stanton and Claremont) are considering reverse privatization -- spending $100 million or more in bonds and using the power of eminent domain to take over water utilities from their private suppliers in order to combat rising rates, even though these bills are climbing for public and privatized systems alike.

Prison Horror Stories

But California also has new opportunities for privatization. Last April, the state approved a realignment of its prisons, sending many low-level, nonviolent offenders from the state system to the counties. California’s annual cost of $47,000 per inmate is the highest in the nation, and private operators offer opportunities for savings as well as for an improvement in the horrific conditions in the state’s prisons, where guards are often protected from accountability, thanks to a reported code of silence, and where 70 percent of parolees return to prison within three years of their release.

Critics of privatization, such as New York Times columnist Paul Krugman, focus on the potential for undue political influence: “We seem to be turning into a country where crony capitalism doesn’t just waste taxpayer money but warps criminal justice, in which growing incarceration reflects not the need to protect law-abiding citizens but the profits corporations can reap from a larger prison population.”

Yet nothing has warped the California justice system more than the California Correctional Peace Officers Association, which exerts undue political influence on both major parties. The prison guards union supports law-and-order politicians and uses its muscle to oppose reforms to the state’s ham-fisted three-strikes law and to its drug laws.

As the Los Angeles Times reported last year, “Lawmakers struggling to keep cell phones away from California’s most dangerous inmates say a main obstacle is the politically powerful prison guards union, whose members would have to be paid millions of dollars extra to be searched on their way into work.” The guards, the article noted, “are the main source of smuggled phones that inmates use to run drugs and other crimes, according to legislative analysts who examined the problem.”

Yes, a private prison company has contributed money to support Governor Brown’s tax-increase measure, but no private vendor could ever approach the clout of the prison guards union, which can stop even the most modest criminal-justice innovations.

Other unions are equally adept at stopping reforms in other parts of state government.

Privatization Battle

Private companies cannot simply offload their unfunded employee costs onto the taxpayer, the way the public unions do, because they have to control their costs. For instance, Golden State Water Co., now fighting the municipal takeover attempts referred to above, has higher rates than neighboring government-run systems, but its rates must cover the total cost to provide the service, which is why it switched its employees from a defined-benefit pension plan to a defined-contribution plan.

Privatization is not the same thing as the true private sector, where companies compete for customers rather than to win government contracts. In its worst form, a privatized service marries the inefficiencies and bureaucracy of the public sector with the profit motive.

But more often -- such as in Riverside, where the privatized library significantly expanded its services -- it offers significant cost savings and greater oversight, accountability and improved customer service.

For those who reflexively reject privatization, what is the alternative? The status quo, after all, is a greedy public workforce that has shown again and again that it puts its own welfare above that of the people. As long as the voters are willing to increase their taxes, or someone else’s, to maintain bloated and inefficient government, they will continue to get more of the same old thing.

(Steven Greenhut is vice president of journalism at the Franklin Center for Government and Public Integrity. He is based in Sacramento, California. The opinions expressed are his own.)

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To contact the writer of this article: Steven Greenhut in Sacramento, California, at

To contact the editor responsible for this article: Katy Roberts at