Letter to the Editor

Privitization

Wednesday, April 12, 2006

Dear Editor:

Ronald Reagan once said "outside of its legitimate function, government does nothing as well or as economical as the private sector." I believe this same philosophy is the exact direction the City of McCook needs to take.

Any operation the city is presently involved in, other than public safety, could be and should be looked at either to sell or privatize the management of.

Put most simply, privatization is the transfer of assets or service delivery from the city to the private sector. This can run from a very broad range with little or no city involvement or creating a partnership between the city and the private service provider.

This is not an original idea. Currently the State of Nebraska has privatized 68 public services to the private sector. And other communities and cities have done the same.

Germantown Tennessee officials privatized their public library system at an annual cost of $1.1 million dollars, which was cheaper then paying $1.5 million annually to stay in the library business.

The latest data I was able to obtain shows there are 433 privately operated and investor owned water municipalities in the country. Leominister, Massachusetts saw a savings of $3 million dollar in capital cost and an annual savings of $350,000. North Brunswick, New Jersey projected a cost savings of $9.9 million over 20 years. Jersey City, New Jersey has seen a 35 percent annual savings in their privately owned water system.

And California completed a study on the operating expenses for the California investor-owned water companies vs. the Government owned water agencies with some very interesting results. The total operating expense per connection was $273 vs. $330 for the government owned municipalities. Employees per 1,000 connections were 1.62 vs. 3.49 for government owned municipalities and salaries as percent of operating revenue was 13.40 percent vs. 37.13 percent for the government owned municipalities.

Evidence also supports the idea that current city agencies should be allowed to bid on contracts along with the private sector. Just the exposure to competition has led many public agencies to improve their service and significantly reduce costs.

Currently the City of McCook has no incentive to hold down production costs (services), private producers who contract with a city to provide the service have more at stake, thus encouraging them to perform at a higher level for lower cost.