March 31, 2011
Public sector workers around the country are partnering with governors and mayors to solve the fiscal crunch and create better government. Oregon Governor Kitzhaber commended state employees, represented by SEIU Local 503, for their report identifying ways to save the state government nearly $1 billion.
They suggested a number of cost savers, including:
Reducing excessive layers of management
Cutting contracted services that can be performed more cheaply by public employees
Purchasing prescription drugs through the state Oregon Prescription Purchasing Program
Consolidating services and other functions within small agencies
Improving collection practices for recovering unpaid taxes.
The report also calls into question dubious "tax expenditures" that reward some Oregon corporations for "scalping" environmental tax credits and allows wealthy private citizens with no connection to the movie industry to profit as intermediaries from a program designed to attract film and video production.
Recognizing the value and cost effectiveness of work performed by public employees, long-time privatization guru Stephen Goldsmith, Deputy Mayor of New York for Operations, announced that New York City will reduce spending on outside contractors for information technology projects and rely more on city employees to perform work that had been contracted out.
Goldsmith spoke to reporters at City Hall and published an op-ed saying, "I think the eventual savings (from contracting-in) will be in the hundreds of millions of dollars." Goldsmith has already found $41 million in immediate savings by bringing the city's data center and wireless network in-house.
For years, city workers, represented by AFSCME District Council 37, have been urging reform of the city's contracting system and its studies have pointed out the potential for hundreds of millions of dollars in savings from contracting-in. They first urged the mayor to focus on the wasteful CityTime project. Now, they are urging the City to broaden the scope of its new contracting-in commitment beyond IT to include engineering and other professional service areas.
The City's reversal occurs in the wake of tremendous cost-overruns and a scandal involving contractors on the CityTime project to automate payroll and timekeeping for city employees. What began as a $68 million project will end up costing more than $700 million. Prosecutors have charged CityTime contractors with stealing $80 million. A project to modernize the city’s 911 system has also been plagued with costly delays and cost overruns involving the use of high-priced outside consultants.
ITPI released a backgrounder this week describing the failed promises of cost savings from privatization. It shows how hidden costs, cost overruns and inaccurate cost-benefit projections typically erase promises of cost savings. Click here to download the Backgrounder.
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