Local Government Privatization, part 1

The privatization of certain government services is hardly a new concept. Most of us dispose of trash now through private contractors. Many prisons are now privatized. Security forces in Iraq and Afghanistan are somewhat privatized.

The traditional rationale behind government services has been the idea that the role of government is to provide services for the common good when the private sector is either unable or unwilling to fill the needs.

With so many pressing public issues on its plate, Willmar’s government must consider separating itself from those services that the private sector could provide. This is necessary for two reasons. One, by divesting us of public services that could be provided by private companies, our leadership can focus more of its attention on the more critical needs that government traditionally serves, such as public safety. Second, privatization provides taxpayers additional options to potentially lower the cost of doing the public’s business.

In Willmar, there are five services currently provided by local government which would be better and less expensively served by privatization.

1) RICE HOSPITAL

Willmar’s public hospital is the largest city-owned hospital in Minnesota. The health care system is the most volatile industry in the United States. Health care in America consumes over 20% of our Gross Domestic Product. As Willmar’s poor population increases, the percentage of Rice’s patients covered by public insurance for the poor increases as well. Reimbursements to hospitals by public health insurance providers is notoriously low, compared to traditional insurers like Blue Cross. This scenario exposes Willmar’s taxpayers to the likelihood of increasing losses at the hospital over time - losses that taxpayers have to eat.

The only hospitals that fare well in this environment are those owned by large hospital groups. The economies of scale allow hospitals to buy more efficiently, attract more doctors, and negotiate more favorable reimbursement rates for insurers.

It’s time privatize Rice Hospital.

2) Municipal Utilities Commission

What more to say here? If Kandiyohi County Power Cooperative can be operated without government involvement, why can’t MUC? Let’s turn over this agency to a cooperative, or to CenterPoint Energy, or to another private provider. The wind turbines provide about 2% of Willmar’s power - at a cost of about $7 million per turbine, plus annual maintenance. The antiquated power plant downtown provides about 18% of our energy needs. Obviously, there are economies of scale in the provision of energy that, like Rice Hospital, the city of Willmar will never realize. It’s time to spin off the MUC.

3) THE MUNICIPAL AIRPORT

Our little airport will never be commercially viable in our lifetime. It serves no other purpose than to provide convenience for local corporate users and pleasure for local aviation enthusiasts. Its supporters will say that the airport doesn’t really cost Willmar very much, as the majority of its support comes from the Federal Aviation Administration. But wait a minute….the FAA is supported by: taxpayers!

The airport could be reorganized as a private airport, owned cooperatively by its users, just like Kandiyohi Power Cooperative. Sometimes cost savings is the issue, but in this case, the argument that local government should not divert one iota of its resources or its mental energy to this airport should be argument enough for its privatization.

4) THE DOROTHY OLSON AQUATIC CENTER

By all accounts, the Aquatic Center has been a successful venture. It’s a fee-driven enterprise. So why should the city divert any of its attention to a facility with a cash flow?

Divest it!

5) ROBBINS ISLAND

Before the city’s taxpayers take on additional financial responsibility for Robbins Island - and let’s not kid ourselves, a new playground won’t maintain itself - let’s take a look at the options for increasing its utilization under private ownership, or by leasing to private operators.

Once we open the door to this train of thought, other possibilities for privatizing some of the common services we typically view as government services begin to reveal themselves.

The most important goal that can be served by the privatization of these services, in my opinion, is to focus our local government’s attention on more important issues which, all too often, our local government would prefer to ignore; that is -

The really hard stuff.