Headlines
More states privatizing their infrastructure. Are they making a mistake?
Colleges shedding non-core operations
NJ: Some of Christie’s biggest bills match model legislation from ALEC
IL: Chicago not yet grounding Midway privatization possibility
PA: Gov. Corbett considers privatizing state lottery
MI: Unions would face cuts under Michigan’s new plan to save Detroit
WI: Parts of state’s anti-union law ruled unconstitutional
WI: Judge halts Milwaukee sheriff’s plan to privatize court bailiffs
NC: Privatizing pre-K hurts rural counties – editorial
FL: Can a 100% private passenger rail line turn a profit?

More states privatizing their infrastructure. Are they making a mistake?
Is this the future of transportation? Say you’re a state politician. Your local roads, bridges, and transit systems are all in dire need of upgrades. But there’s not much money left. Budgets are crunched. No one wants to raise taxes. And Congress is throttling back on transportation funding. So what’s left? Privatization, of course…But before getting too excited about the magical powers of private firms, experts warn that there are potential pitfalls to these arrangements. For one, as Robert Puentes of Brookings noted in a recent paper (pdf), these are complicated multi-decade financial arrangements. And “many states,” he notes, “lack the technical capacity and expertise to consider such deals and fully protect the public interest.” For another, the deals need to be structured wisely — Maryland’s bill, for instance, would prevent competitive bidding among private firms, which critics say could open the door to corruption and inflated contracts. Moreover, a road that’s privately owned for 75 years has the potential to conflict with other public-policy goals. For instance, as a recent GAO report (pdf) found, four of the five privately-funded toll road projects in the last 15 years included non-compete clauses that prevented the government from building nearby roads. As Tim Lee notes, “real-world privatization schemes are often explicitly protectionist.” So what if a state, say, later decides that it wants to build a rail network that competes with the private road? All sorts of complications could arise. Plus, privatization can’t work everywhere. “It’s not a universal tool,” says Jonathan Peters, a professor of finance at the College of State Island who has studied these partnerships. There are plenty of roads in states like Montana, for starters, that don’t pay for themselves and would be unappealing to private investors. There are ways around this — Madrid, for one, built its subway system by offering formula-based subsidies to private firms, which still bore the risk of a shortfall in rider demand — but it’s trickier. Few transportation experts think we can fill our multi-trillion-dollar infrastructure shortfall with private money alone. Washington Post

Colleges shedding non-core operations
Ohio State University wants to drop out of the parking business. In an era of stagnant or declining state support for higher education nationwide, the university is seeking investors who might pay hundreds of millions of dollars to lease its parking system of nearly 36,000 spaces. The university—one of the nation’s largest, with a nearly 57,000-student main campus in Columbus—is also considering privatizing a roster of other assets that could make a midsize city envious, including two 18-hole golf courses, a small airport and a power grid…Public universities across the U.S. have seen financial support from state governments decline, and have faced growing criticism for raising tuition to help cover the gap. Tuition and student fees at four-year public universities rose more than 70% over the past decade, according to the College Board, while state appropriations per full-time student fell more than 20%. That has prompted some universities to turn to the private sector for services beyond common areas such as bookstores and restaurants. The University of Kentucky announced plans in December to transfer control of its dormitories to a private company in exchange for up to $500 million in upgrades and new construction. Portland State University in Portland, Ore., signed a deal with American Campus Communities Inc. in 2010 to build a $90 million, nearly 1,000-bed dorm on campus that is scheduled to open this fall…Some students and staffers worry that a private-sector operator would be tougher with parking fines, among other concerns, and contend officials haven’t provided enough information to show the school wouldn’t be better off financially in the long run managing parking itself. The Wall Street Journal

NJ: Some of Christie’s biggest bills match model legislation from ALEC
ALEC has quietly made its mark on the political landscape by providing state governments with mock-up bills that academic and political experts say are, for the most part, tailored to fit a conservative agenda. In recent years, states — particularly those with new Republican governors and legislatures — have been flooded with ALEC’s model bills. Nearly 1,000 of them are introduced every year, and roughly one-fifth of those become law, according to ALEC’s own count. ALEC’s bills are especially attractive because they are written so they can virtually be copied and pasted onto legislative proposals across the land…A Star-Ledger analysis of hundreds of documents shows that ALEC bills are surfacing in New Jersey, where Republican Gov. Chris Christie is trying to remake the state, frequently against the wishes of a Democrat-controlled Legislature. Drawing on bills crafted by the council, on New Jersey legislation and dozens of e-mails by Christie staffers and others, The Star-Ledger found a pattern of similarities between ALEC’s proposals and several measures championed by the Christie administration. At least three bills, one executive order and one agency rule accomplish the same goals set out by ALEC using the same specific policies. In eight passages contained in those documents, New Jersey initiatives and ALEC proposals line up almost word for word. Two other Republican bills not pushed by the governor’s office are nearly identical to ALEC models…There is nothing illegal in what ALEC does or in using its bills, but critics say New Jersey officials are handing off a cardinal duty — do your own work — to a national group with unique ties to the business world. If they’re relying on templates, critics add, state officials should publicly acknowledge any work that they do not do themselves and the source of any proposals that aren’t their own, especially when that source has an agenda. The Star-Ledger

IL:Chicago not yet grounding Midway privatization possibility
The $2.5 billion privatization of Midway Airport that collapsed in 2009 for lack of financing may not be quite as dead as Mayor Rahm Emanuel would like Chicagoans still livid about the parking meter deal to believe. Earlier this week, Emanuel’s Chief Financial Officer Lois Scott wrote a letter to the Federal Aviation Administration asking for one last extension — until Dec. 31 — in the deadline to decide whether to revive the deal or permanently pull the plug…Determined to avoid the political furor that followed Daley’s decision to privatize Chicago parking meters, Emanuel campaigned on a promise to permanently ground the Midway deal. The mayor emphatically repeated that pledge just a week ago. But, the city’s decision to seek a pair of extensions from the FAA — and the background of two key members of Emanuel’s financial team — has raised suspicions. Scott co-founded a firm that provided strategic financial advice to state and local governments across the country about privatization. And as a private attorney, Budget Director Alex Holt advised the group that was poised to acquire Midway before the deal fell apart. The 2009 collapse of the Midway deal left Chicago taxpayers with a $126 million down payment but no apparent way to shore up underfunded city pensions that threaten to become a financial albatross for future generations of property owners. The 99-year lease would have allowed Midway Investment and Development Company LLC to pocket airport revenues that topped $130 million in 2006, including parking, concessions, and passenger facility charges. Chicago Sun-Times

PA: Gov. Corbett considers privatizing state lottery
Gov. Tom Corbett is taking steps toward hiring a private company to run the Pennsylvania state lottery, the latest move by the Republican to shift state services to the private sector. The administration has briefed top lawmakers and labor union representatives on an idea it is billing as an effort to improve cash flow to better afford the rising cost of programs for the elderly…Other governors, such as Ohio’s John Kasic, have raised the idea recently, although states are limited by federal guidelines as to the extent of control that a private company can have. For instance, a 2008 memorandum from the U.S. Department of Justice said it is permissible for a state to contract with a private lottery manager, but not to hand significant control of it to the company in exchange for a large, up-front payment or an annual payment. Last year, a private group that includes GTECH and Scientific Games took over management of Illinois’ lottery with promises to boost sales and revenue. The group gets a $15 million-a-year management fee and a percentage of profits if it produces above a certain level. Currently, the Pennsylvania Lottery is run by the Department of Revenue. Should Pennsylvania hire a private manager, it is not clear what would happen to the 233 unionized employees who work for the 40-year-old Pennsylvania Lottery. David Fillman, executive director of Council 13 AFSCME, which represents the employees, said he told Corbett’s Office of Administration in a recent meeting that the union would fight the move. “My first question for the administration was, ‘What’s broken with this thing that we have to fix?”’ Fillman said Saturday. “It’s not broken. It’s working very well.”  The Mercury

MI: Unions would face cuts under Michigan’s new plan to save Detroit
Gov. Rick Snyder’s latest version of a consent agreement gives the Detroit City Council and the mayor more power than the previous proposal, but it adds a twist that has put the council in a tough predicament. The new plan calls for the city to ignore recently ratified union contracts and renegotiate them this summer. And it includes permission to, among other things, outsource work and consolidate departments. The state’s latest proposal was made public Thursday. Council members spent about five hours familiarizing themselves with the document, but most still gave it the cold shoulder.  Detroit Free Press

WI: Parts of state’s anti-union law ruled unconstitutional
A federal judge concluded on Friday that parts of a law limiting public sector unions in Wisconsin — the law that started a political battle that led to Gov. Scott Walker’s recall election — violate the Constitution. The judge’s opinion was viewed as a partial victory for labor unions, though the judge also upheld central elements of the law. New York Times

WI: Judge halts Milwaukee sheriff’s plan to privatize court bailiffs
Milwaukee County Sheriff David A. Clarke Jr.’s plan to privatize courtroom bailiffs won’t fly – at least not for now. Judge Dominic D’Amato ruled that Clarke could not place private security guards in courtrooms, a move the sheriff had already started by issuing a $1.4 million contract with G4S Secure Solutions. The firm, formerly known as Wackenhut, is an international company that provides personnel and technology services. D’Amato issued a temporary injunction halting the deployment of 25 part-time G4S guards, siding with the county Deputy Sheriffs’ Association. Clarke argued that he had the power to hire the G4S guards as an emergency stopgap and wanted that to avoid paying full-time bailiffs overtime…The deputies’ union has resisted opening the door to part-time bailiffs or private security for the courtroom. Under current staffing, felony courts have two bailiffs each, while misdemeanor and civil courts have one. Roy Felber, president of the Deputy Sheriffs’ Association, said Friday the ruling was “a big win for us. I’m very disgusted that we are trying to privatize law enforcement.” Private security guards would be loyal to their company, not to the county, Felber said. Journal Sentinel

NC: Privatizing pre-K hurts rural counties – editorial
N.C. lawmakers on a House panel wisely backed off recommendations last month that would have taken away access to state pre-kindergarten programs from thousands of poor N.C. children. The panel’s draft report had included recommendations to dramatically raise the income eligibility guidelines – a change that would disqualify many financially struggling families from participating. Members also backed away from a recommendation that state pre-K be provided solely in private child care facilities – not in public schools…A new report from the N.C. Justice Center’s N.C. Budget and Tax Center provides good ammunition to explain why keeping pre-K in public schools has merit. Findings from that study released last week show that public schools play a major role in North Carolina’s pre-K program. In 17 counties, 100 percent of the pre-K slots were in public schools as of January of this year. Those counties are rural and most are high-poverty…The impact on rural counties is evident. Privatizing this program would mean no pre-kindergarten for many of them, particularly since these rural, high-poverty counties don’t have networks of private child-care centers where pre-K could be housed instead. Charlotte Observer

FL: Can a 100% private passenger rail line turn a profit?
Florida East Coast Railway is about to get a new look, with its new, all-private passenger rail line…They’re calling it All Aboard Florida, and it comes just about a year after Governor Rick Scott rejected $2.4 billion in federal funds to build a far less ambitious 85-mile line from Tampa to Orlando. It’s no coincidence that All Aboard Florida’s 240-mile line also centers on Orlando, the most-visited city in the United States according to Forbes. (Miami is number five.) A Tampa-to-Jacksonville segment could be added on later. Streetsblog