The Assembly State Government Committee took testimony on a proposed constitutional amendment Thursday that would tighten regulations for privatization of public services.
The keys to increased oversight, according to the measure, are that any proposed privatization must not raise fees, reduce services, or lower work force standards.
The measure is being considered at a time when the Christie administration has been advocating for increased use of the private sector to provide services.
According to the proposal, sponsored by Assemblyman Peter J. Barnes III (D-18), of Edison, no public agency could engage in any privatization contract worth $250,000 or more without meeting a series of quality-control measures including the awarding of contracts via sealed bids, conducting analyses to prove that a privately run service is less expensive than a publicly maintained one, and complying with nondiscrimination laws.
Opponents of increased privatization – educators, community activists, environmentalists, unionized labor and others – supported the bill as a “framework for accountability.”
They argued that privatization often leads to increased costs and decreased services, risks unanticipated expenses, often leads to ‘in-sourcing’ of work back to the public entities, and risks private entities colluding to increase costs.
“There have been instances,” said Jeff Tittel, chapter director of the N.J. Sierra Club, “where private water companies have deliberately botched water quality tests to avoid problems from contamination that would require costly upgrades to their systems.”
Jim Walsh, the New Jersey director of the non-profit Food and Water Watch, said “private companies have little or no accountability to the public and may or may not live up to promises they make to communities when privatization contracts arise, leading to adverse impacts on our communities.”
However, opponents said the bill would be anti-competitive by establishing wage “floors” that would make cost-savings difficult to achieve.
Diane Walsh, a vice president with the Commerce and Industry Association of New Jersey, said the bill offers nothing that could not be accomplished by way of carefully written Requests for Proposals.
Committee chair Assemblywoman Linda Stender (D-22), of Fanwood, said she wanted this hearing held because “we need to know what any real cost is if we’re going to make such a substantial change.”
“The (auto inspections) debacle cost tens of millions of dollars,” she said in reference to the attempt years ago to privatize state motor vehicle inspections.
Kevin Roberts, spokesman for the governor’s office, issued a statement after the hearing in opposition to the proposal.
“This would enshrine a special interest giveaway in the New Jersey Constitution. That makes this an easy call – it’s bad legislation and hardly a good reason to fiddle with the state Constitution. We have no issue with establishment of standards and best practices for outside contracting of state services, but this is absolutely the wrong way to do it. It also speaks volumes that there’s not a single Republican sponsor on the bill.”
If the bill is passed, it would have to go to the voters for approval since it would be amending the constitution.
The New Jersey Coalition on Privatization is holding a campaign launch press conference on Monday at the Statehouse to begin the discussion about instances when privatization is found to be damaging to the public interest.