Democrats Struggling to Push Ahead With Privatization Bill

State Senate Democrats are attempting to put together legislation that would ensure that privatizing public services translates into actual savings for taxpayers. But they're getting some pushback from across the aisle, with Republicans complaining there are too many strings attached, as well as from the business community.

It was expected that the bill would go before the Senate last week, but it wasn't on the agenda.

Among other things, the legislation would require public agencies get a fiscal analysis before they contract for more than $250,000 with a private vendor to take over services.

Subsequent performance would be subject to a state audit, which could lead to penalties or even loss of the contract for failing to produce promised savings. The bill also would require that private vendors pay “comparable wages” to public employees and give hiring priority to those laid off because of the privatization.

A hearing on the measure before the Senate Labor Committee earlier this week quickly broke along partisan and ideological lines. The committee advanced a substitute version combining bills from Sens. Loretta Weinberg (D-Bergen) and Shirley Turner (D-Mercer).

The changes exempted some public works services and those performed by disabled workers in rehabilitation centers.

Almost no one mentioned the amendments. Instead, consumer and labor groups generally praised the effort, though some called for sterner measures. Some speakers anticipated future battles, and scandals, if Gov. Chris Christie proceeds with plans to let a private vendor run the New Jersey Lottery. But business groups said the measure would cost taxpayers instead of protecting them.

The arguments did not appear to change any minds. Sens. Fred Hadden (D-Gloucester), Richard Codey (D-Essex), and Sandra Cunningham (D-Hudson) all supported the measure. Sens. Dawn Marie Addiego (R-Burlington) and Anthony Bucco (R-Morris) opposed it.

The legislation “undercuts the underlying promise of privatization,” said David Brogan, first vice president of the New Jersey Business and Industry Association. The provisions for comparable salaries and hiring laid-off workers would discourage potential bidders and prevent savings, he said.

“We’re trying to promote transparency in contracting and accountability to the taxpayers of New Jersey,” said Eric Richard, legislative affairs director for the New Jersey AFL-CIO. Even a report from the governor’s privatization task force recommended a “rigorous cost-benefit analysis” before such contracts, he said.

“This bill would skew the process, making it impossible for private contractors to meet the requirements at a lower cost,” said Diane Walsh of the Commerce and Industry Association of New Jersey.

“The process for privatization in New Jersey is simply broken,” said Seth Hahn, political director of CWA-New Jersey. Contracts often “take a lot of money off the top and send it to a management firm that is not in New Jersey.”

“We recognize that in some cases, privatization may save money,” said Fran Ehret, president of the local representing Turnpike employees. But she said that is frequently “all on the backs of the workers,” not a help to the economy, unemployment, or social costs. Her members already have accepted a $4.00/hour pay cut, she said.

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