MuniLand

Is privatization waning?

For thirty years there has been an ideological pressure for the U.S. government to sell public infrastructure, assets and services. Prisons and schools have been privatized. Toll roads, like the Indiana Toll Road, have been sold to private consortiums. Many of these assets were created by earlier generations who regarded their obligations to citizens as important. Now there is a bigger commitment to an economic philosophy that insists government is the most expensive and least efficient provider of services. Somewhere along the line, with little economic or financial validation, privatization was accepted as the best approach for public assets.

Recent events suggest that the tide may be turning. Idaho’s governor, a privatization advocate, has announced that he is ending private contracting for the state’s correctional facility. The Idaho Statesmen-Review’s Betsy Russell reports:

[Idaho] Gov. Butch Otter just announced that he’s ordering the state Board of Correction to halt its ongoing effort to get new bids from private firms to run the privately operated state prison, the Idaho Correctional Center, south of Boise, and instead move to have the state take over operating the scandal-plagued lockup.

‘It’s disappointing, and it’s disappointing because I am a champion of privatization,’ Otter told reporters at the AP Legislative Preview. ‘It’s disappointing, but I think it also recognizes what has been happening, what has happened – it’s necessary. I think it’s the right thing to do. Is it the desirable thing to do for me? Not necessarily, because we had better hopes for outcomes in privatization.’

What happened? The AP reported that Corrections Corp. of America (CCA), the nation’s largest private prison operator, had run into some problems overseeing the Idaho Correctional Center:

A big week for state-sponsored online gambling

“Around the world, people are shifting their gambling from traditional slot machines and tables to online and mobile devices,”  David G. Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas. (via Philadelphia Inquirer)

States are battling to get control of gambling via the Internet. Nevada, which has the largest casino-based gambling business, passed legislation this week that allows it to grant licenses for online gambling and to enter multi-state pacts to extend the reach of its licensees. Meanwhile, New Jersey is queuing up legislation to jump into the online gambling race. Delaware was the first state to allow online gambling, but it has a more restrictive approach that requires that players reside in the state.

Online gaming is being built on a broad foundation of national gambling. The Rockefeller Institute laid it out in a 2010 report:

The rule of law prevails for the Pennsylvania lottery

In the media appearance above, Pennsylvania Attorney General Kathleen Kane announces that the contract drawn up by Governor Tom Corbett to privatize the state’s lottery management “contravenes the Pennsylvania Constitution and is not statutory authorized.” Translation: Pop- Bam- Take that, governor – You don’t have the power that you think you have.

This is one of democracy’s more glorious moments.

I wrote in early December around when Corbett’s deal to privatize the lottery became public:

There is a lot of darkness and a web of connections around the efforts to privatize the Pennsylvania state lottery. Tom Corbett, the governor of Pennsylvania, is attempting to force through the privatization before the legislature comes back into session in January and has a chance to review the terms of the 20-30 year deal. Democrats are howling.

Pennsylvania bets on $70 billion in cash flows

 

A big brawl is going on in Pennsylvania over the way that Republican Governor Tom Corbett has been maneuvering to privatize the state’s successful public lottery. The governor held negotiations in secret for months before announcing in November, 2012 that he had chosen a single bidder, the UK’s Camelot Global Services, to be awarded a 20-25 year contract to operate the lottery.

This announcement, made while the Pennsylvania legislature was in recess, was intended to move the governor’s process to conclusion before the legislature came back into session. Public outrage caused Corbett to initially delay the contract, but in a move that seemed to show contempt for the state’s legislators, his office gave Camelot a “Notice of Award” late last Friday; just before the Senate Finance Committee was to hold a hearing on the details of the contract.

The effort to privatize Pennsylvania lottery hits a roadblock

Nothing makes me happier than to see law as the weapon of choice in a fight between public officials. There is a big battle underway in the Commonwealth of Pennsylvania over the efforts of the governor to privatize the lottery, currently a big source of revenue for the state’s senior citizen programs. I wrote last week about Pennsylvania’s sweetheart lottery privatization deal:

There is a lot of darkness and a web of connections around the efforts to privatize the Pennsylvania state lottery. Tom Corbett, the governor of Pennsylvania, is attempting to force through the privatization before the legislature comes back into session in January and has a chance to review the terms of the 20-30 year deal. Democrats are howling.

One Democrat with a lot of legal authority is howling away, and he has essentially blocked the governor’s efforts to sell the highly profitable lottery to a British firm. The Patriot News writes:

Pennsylvania’s sweetheart lottery privatization deal

There is a lot of darkness and a web of connections around the efforts to privatize the Pennsylvania state lottery. Tom Corbett, the governor of Pennsylvania, is attempting to force through the privatization before the legislature comes back into session in January and has a chance to review the terms of the 20-30 year deal. Democrats are howling.

The Patriot News tells one side of the story:

Calling the administration’s pursuit of this potential deal “too secretive,” House Democratic Leader Frank Dermody, D-Allegheny, urged Corbett to be more transparent about his plan for privatizing the lottery that he said would cost older Pennsylvanians hundreds of millions of dollars in lost funding for services over the life of the 20-year contract.

“Now, when there is no General Assembly in session, he is trying to hand-deliver a lucrative contract to the lone bidder with no hearings, no legislative approval and no public scrutiny. This whole thing stinks,” Dermody said.

What is happening with Puerto Rico employment?

Some odd employment data is coming out of Puerto Rico. Although the population of the island has increased (see chart above), labor participation and the number of people employed have declined steadily, as seen below.

Meanwhile the government reports that the unemployment rate keeps declining (see below). Is this because they are contracting the size of the labor pool, or are there really new jobs coming online?

A Spanish-language publication says that employment gains this year are coming from government hiring (Google Translation from Spanish):

MuniLand Snaps: July 26

Watch the latest video at video.foxbusiness.com
Peter Hayes of BlackRock gives a good overview of the current state of muniland (Hattip Learnbonds).

Good Links

NASBO: Pension accounting reforms regarding the use of discount rates

BlackRock: $55 billion – amount closed in budget gaps by 31 states for FY 2013

Manhattan Institute Public-sector unions’ money machine

LAT: Bankrupt cities? Don’t blame unions

Reuters: Economy, budget woes threaten non-profit hospitals – Moody’s

MTA: Budget remains balanced, but long-term challenges persist

City of Harrisburg: City completes and releases 2009 audit of city finances

Times-Tribune: Scranton Composite Pension Board tables city request for $16 million loan

MuniLand Snaps: April 4

Watch Texas Justice on PBS. See more from Need to Know.

There are surprises everywhere in muniland. Here is one I learned about from PBS: Despite leading the nation in executions, “Texas has been a pioneer in finding alternatives to prison – as a way to control costs and to prevent convicts from returning.”

Good Links

Atlantic Cities: The true cost of unwalkable streets

WaPo: “Taxmageddon” in one table

NYT: Where housing once boomed, recovery lags

Reason: Recovering America: earning less, spending more, $6.7 trillion poorer

WSJ: State-by-state unemployment rate from the Bureau of Labor Statistics

Reuters: Municipal bond sales up 68.3 percent, to $78.9 billion, in first quarter

Bond Buyer: Symposium on distressed municipalities

Bloomberg: Ohio governor fights own party over taxing Ohio’s drillers

Columbus Dispatch: Ohio proposes coordinated care for Medicare, Medicaid

Reuters: Fish tanks and palm trees – Miami’s new baseball stadium

The Civic Federation: Chicago plan lacks details on how individual projects will be funded

MuniLand Snaps: March 8, 2012

A woman wins a million dollars in the state lottery but still feels she’s justified to keep receiving food stamps. A local reporter tracks her down and confronts her. Although this discrepancy was extreme, I expect we will see government placing a higher burden of proof on welfare recipients to demonstrate need as state and local budgets tighten and the federal dollars that flow to them shrink. There will be less to go around, and the threshold for receiving welfare benefits will be higher.

Good Links

National Conference of State Legislatures: Percentages of women in state legislatures

American Public Radio: Washington state will limit emergency room Medicaid procedures

  • # Editors & Key Contributors