In 2011, N.J. privatization efforts gathered steam

TRENTON – In June, the decision to let New Jersey Network go dark in favor of the privately run NJTV spurred an outcry among Democratic legislators.

As evidenced by such initiatives, the drive to privatize state operations was alive and well this year in New Jersey. Other targeted areas seen as ripe for some degree of privatization this year included public parks, fire inspections, and toll collectors.

In his attempts to cut state government costs, Gov. Chris Christie’s efforts to get the private sector involved in several areas that traditionally have been almost entirely run by the state have been consistent and unrelenting.

Some of the recommendations were outlined in a May 2010 report issued by a “privatization task force” headed by former New Jersey Congressman Dick Zimmer.

The parks management plan unveiled by Christie in November at Liberty State Park in Jersey City borrowed some of the recommendations that report laid out, mainly the idea of having more concessionaires.

“They got the gist of it,” Zimmer said in a telephone interview about the Christie/Department of Environmental Protection state parks funding plan. “I’m pleased they’re moving in that direction.”

There are some differences. While the task force report recommended having the state “enter into one or more long‐term concession agreements with private recreation firms for the operation and management of all state parks,” the DEP plan was a little broader, calling for “partnerships with like-minded governments, nonprofits and corporations.”

The DEP plan mainly calls for ways to find more revenues, for example, by hiking fees on camping, (from $1 to $3), whereas the privatization report simply identified, in general terms, areas that could be streamlined.  Christie framed the plan more specifically as a way to make the park system, and the funding mechanism, more sustainable.

Zimmer made it clear that if a private entity took over the management of a state park, it still would have to follow the state’s direction on big issues, such as hours of operation.

“The state would always maintain the large policies,” the former congressman said.

Similar state park management privatization plans have taken place in Florida, Arizona and California, with mixed success.

Both plans, however, do call for lease agreements to carry out various operations that would at least relieve the DEP from performing various tasks.

The parks plan was one of the more recent ideas Christie’s team has pursued.  

On March 25, it was announced that several employees from the Division of Codes and Standards, which is part of the Department of Community Affairs, were handed pink slips. The recommendation to cut the Code Enforcement division was also in the Privatization Task Force report.

Regarding Codes and Standards, the task force noted that while there are 200,000 units that were awaiting inspection, only about 175,000 could be inspected due to their staff levels. “Units’’ covered a variety of items from fireworks displays to carnival rides to construction sites and elevators.

The report concluded that this shortage is “unacceptable,” adding that “there exists a vast private sector that is capable and willing to complete these inspections.”

The task force also characterized the division as a money loser, having lost more than $10 million in 2009-10.

Several months later, the Fire Code Division of the Department of Community Affairs was being eyed for streamlining and/or elimination, according to Sen. Jim Whelan, (D-2), of Atlantic City.

Concerning the Fire Safety Division, the DCA didn’t explicitly say that layoffs were off-limits. Instead, it characterized the plan as one of many ideas being discussed.

“As we begin preparation of the FY2013 budget, reorganizations are always discussed, but those considerations are preliminary and no decisions have been made,” a DCA official said.

“As we consider increasing efficiencies and decreasing redundancies in government, the number one priority will always be the people the Department is charged with protecting and serving.”

Assemblyman John Wisniewski, (D-19), of Sayreville, who heads the Fire Safety Commission, was not immediately available for comment on this proposed privatization.

Other prominent privatization efforts, such as those aimed at developmental disabilities and mental health institutions, and the Opportunity Scholarship Act, are ongoing.

Recently, Christie signed a bill that would create a task force to determine the effects of shutting down certain institutions.

Concerning the disabilities centers, the report recommended expanded use of community-based group homes, – in part   – to comply with the touchstone Olmstead Supreme Court decision — as well as to save money.

“While New Jersey is among the states with the highest spending for institutions, New Jersey is among the lowest in spending on community services. The cost of care in the institutions continues to rise every year,” the report said.

“Community-based programs are capable of serving a portion of the population now served in the centers at a much lower cost – in many cases less than a third – and of providing appropriate care in an environment favorable for patients and their families.”

Last spring, the administration sought to privatize toll collectors on the N.J. Turnpike, with the administration saying those jobs were fast becoming obsolete with the advent of electronic systems like EZ Pass.

While those jobs haven’t been privatized yet, the administration successfully sought pay cuts and is expected to save the $35 million the task force projected by transferring those jobs to the private sector.

Still, Transportation Department Commissioner Jim Simpson envisions that in five years, manual toll collection will be a thing of the past.

Shortly after the deal was reached, Fran Ehret, who represents the toll collectors union, said the two-year phase-out period will give the employees time to prepare for other jobs or retool.

One of the reasons Simpson and the administration targeted toll collectors was for their high salaries, which averaged $65,000, one of the highest in the region, if not the highest, according to the administration.

The task force report had also cited the high cost for the union employees as a reason to privatize the operations.

“The Authority currently pays $85 million annually for toll collection labor costs,” it stated. “Based on experience in other states, the Authority is paying between 40 percent and 50 percent more per hour per employee than a private vendor might charge.”

Other privatization task force recommendations have also been implemented. The DEP continued its goal of trying to have state-owned golf courses managed by private entities, when it issued requests for proposals for having the Cream Ridge and White Oaks golf courses to continue to be run by companies.

DEP Assistant Commissioner Amy Cradic said having private-sector professionals run the courses would “likely enhance revenue-generating opportunities that benefit the state.”

The task force report said such privately managed courses could save hundreds of thousands of dollars and make normally tax-exempt properties ratables.

“Outsourcing of government golf management in New Jersey, through the long‐term lease of these taxpayer-owned properties, can generate tens of millions in franchise payments to governments in lieu of real estate taxes each year,” the report said.

It added that Centerton Golf Course pays the state a fixed rent of $104,000 per year plus a percentage of gross revenue above a threshold amount.

 

 

 

 

In 2011, N.J. privatization efforts gathered steam