MARCUS: Privatization not the only answer

April 24, 2010

In this age when most government leaders have little courage, they play games. Privatization is a popular political parlor game. Instead of providing thoughtful reasoning for consideration by an informed electorate, officials try to meet public needs through artfulness.

Gov. Mitch Daniels was successful with his lease of the Indiana Toll Road. The road needed lots of modernization and massive expenditures were needed for highways throughout the state. The governor knew the Legislature did not want to raise tolls or taxes for these legitimate purposes. So he got the money by leasing the toll road and letting the private operator raise the tolls.

With that lease money, Major Moves was established. Now our highways statewide are in better shape and the toll road has seen major improvements. Tolls have increased only slightly (so far) and highway taxes have held steady.

This success has provided an example for Indianapolis’ mayor, Greg Ballard. He wants to avoid raising taxes and fees to fix the city’s deteriorated water and sewer systems by transferring ownership to Citizens Energy Group, the local not-for-profit gas company. He wants also to privatize the city parking meters. What he cannot easily privatize, he wants to obliterate: six library branches. But when the chips are really down, Ballard seems willing to have the public sector take responsibility for Conseco Fieldhouse, where the Indiana Pacers play a losing brand of professional basketball.

Some would call this flexibility. Different problems require different solutions. But the truth is that many of the problems are related to the inept and deceptive Indiana General Assembly, which consistently and persistently wages fiscal war on local Hoosier governments.

The problems of Indianapolis are similar to those of Logansport and Madison, Goshen and Huntington. Fearful legislators who cannot be honest with voters have cut property tax revenue to satisfy an anti-government claque. Local governments, including schools and libraries, lack the revenue to meet local needs. The recently imposed property tax caps were sought by Daniels and flushed through the legislative colon by state senators and representatives seeking re-election.

But few local officials will speak up. Ballard does not tell the people of Indianapolis that his administration, and that of his predecessors, was spayed and neutered by the state government. He will admit that he does not have the staff or the money to do what needs to be done to restore the Indianapolis water and sewer systems. But why would it be better to have Citizens Energy run these functions?

There are a few possible cost savings since gas, water and sewer lines run beneath the city streets. But Citizens has no special set of skills or knowledge to create major efficiencies in the operation of the water and sewer systems. What Citizens has is immunity from election when it raises rates.  

The parking meters and their rates are a minor part of an inadequate commitment to public transit in Indianapolis. Ballard does not tell the electorate that neither he nor his predecessors (Democrat and Republican) have ever had a working transportation plan for Marion County, despite years of repetitive work by blue-ribbon committees and distinguished commissions. Now the approach has become regional, which guarantees more delay and more discord because there is no public will to proceed.

Conseco Fieldhouse (like Lucas Oil Stadium) is a monument to the desire of central Indiana to be taken seriously, to have a place of prominence among the nation’s metro areas. The Pacers want $15 million annually from the public sector to operate Conseco. Otherwise—farewell?

Perhaps there could be a public subscription to Pacer stock. But that would not work. Professional sports teams are owned only (with the exception of the Green Bay Packers) by captains of capitalism who seek public assistance when the going gets tough.•


Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.


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