Last fall, San Diego voters handed City Hall a highly effective policy tool to cut government costs and improve public services. Now, 300 days since that election, the time for municipal reviews and how-to guides is over. Policy makers must not delay reform but move to implement “managed competition.”
Managed competition is the policy process that allows private parties and government agencies to bid against each other for the right to deliver public services. For more than thirty years, the managed competition process has been adopted by local, state and federal lawmakers from all points on the ideological spectrum to promote cost savings, efficiency, quality improvements and innovation. Since the late 1990’s, managed competition has even been used in San Diego County government, saving local taxpayers tens of millions of dollars. Despite the crystal ball predictions of political pundits, the majority of these bids in the last decade have been won by the incumbent county government agencies, after undergoing significant internal cost-cutting and management reforms – a strong and healthy sign which proves that competition works and helps public workers as much as it does taxpayers.
With such a compelling case for managed competition, San Diego City voters last November overwhelming approved “Proposition C,” an effort to untie the hands of municipal leaders and amend the City Charter to allow managed competition to proceed on the local level. Today, Prop. C still has not been implemented, tied up in draft policy timelines and municipal machinery. This is an unfortunate situation, given recent figures that show it can be an extremely valuable policy tool.
A policy study released this week by the San Diego Institute for Policy Research and Reason Foundation shows that aggressive use of managed competition with respect to eleven major public services could save San Diego taxpayers up to $200 million. The report details 31 different case studies where managed competition was used to streamline these operations in other jurisdictions. The authors highlighted not only the “usual suspects” like the print shop or fleet maintenance, but also showed how managed competition and the use of private vendors has made a real difference in operations like golf course and park maintenance. Even library services have been improved under managed competition, with the report detailing Riverside County’s successful experience in using a private vendor to operate that county’s 30+ branch library system.
Decisive government leadership is key to the success of managed competition initiative. Voter approval at the ballot box can only begin the process, not complete it. The recent experiences of two big-city mayors help demonstrate what strong leadership can accomplish for taxpayers and government reform advocates.
Faced with a major municipal fiscal crisis, Indianapolis Mayor Stephen Goldsmith waged an aggressive campaign to reduce government costs through managed competition. Throughout his administration Goldsmith opened eighty-six public services to competitive bidding, reducing the cost of government by more than twenty percent, and ultimately saving taxpayers $450 million. In an impressive display of balancing public needs with the concerns of the public labor force, no union members lost their jobs, as they either won the managed competition bids, were hired by contractors, took new jobs inside the City or retired.
Similarly, after inheriting a $2.3 billion budget deficit, New York City Mayor Rudy Giuliani used managed competition and an array of other innovative policy tools to cut public costs and improve service delivery, including awarding new franchises, executing divestments, public-private partnerships and vouchers. Undaunted by a hostile City Council and unafraid to shake up the status quo, Giuliani wasted no time in savings tax dollars and reforming bloated city government. Within the first six months of taking office, he had proposed privatization plans for twenty-six municipal activities. By the end of his two terms, sixty-six of the Mayor’s privatization measures were realized, saving New York City taxpayers $2.29 billion in one-time revenues, and $979 million annually.
Delaying tough decisions and shelving sorely-needed policy reforms like managed competition only exacerbates our fiscal crisis, making it more likely that taxes and fees will have to be raised in the months ahead. This plays into the hands of special interest groups, who for years have lamented San Diego as an “under-taxed” metropolis, championing greater government power and tax revenue sources as a cure-all to balance the budgets of City Hall.
Rather than allow San Diego to deteriorate into a high-tax, high-spending Los Angeles-style of government, concerned residents and free-market supporters should unite behind a renewed effort to innovate our way out of our financial problems by aggressively implementing managed competition. Now more than ever, we must regain the lost momentum for reform at City Hall, and beseech local lawmakers to muster the courage today to take decision action in the public interest.
San Diegans have already waited a year for reform, and they should not have to wait another day longer. When managed competition can be used at its optimum potential, local governments can be restored without the perilous prescription of higher taxes.
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