Christie Administration Looks to Privatization to Ease $11 Billion Public Debt

Task force established to dig into what public services could be delivered more efficiently by private providers

The Christie administration plans to look at privatizing some state and local government services as a way of digging New Jersey out of a $11 billion fiscal hole.

In signing his 17th executive order, Gov. Chris Christie today established a five-member task force to come up with recommendations by the end of May of what services and functions could be more efficiently delivered by the private sector, what kinds of savings could be achieved, and to narrow the scope of services the public sector provides.

In announcing the effort, Christie used the occasion to once again harshly criticize both public employee unions and the Corzine administration for an agreement they reached last year in which state workers deferred a pay raise and agreed to take 10 unpaid furlough days last year in exchange for a no-layoff pledge. The Governor repeatedly identified the agreement as “handcuffing” his options for dealing with the state’s budget deficit.

Even so, Christie at a press conference in his office said he would have created the task force to study privatization whether or not the state was in a fiscal crisis. When asked about an effort by the Whitman administration to privatize motor vehicle inspections, a process many deemed a failure, Christie replied, “This is a different day, a different administration. As I said in my inaugural speech, I didn’t come here for failure.”

Christie named former Congressman Dick Zimmer, a conservative Republican and frequent critic of government waste, to head the task force. Zimmer, who pledged approach the job from a pragmatic instead of ideological point view, said New Jersey is way behind other states in embracing privatization.

Still, Christie said he has no preconceived notions of what state agencies may be privatized or how many state workers could lose their jobs as a result of the task force’s recommendation. “This is not a result in search of a rationale,” he said.

Christie castigated the public-employee union leadership for not being willing to make the shared sacrifices that all New Jerseyans will need to make to solve the state’s fiscal woes. “What we’re talking about is an out-of-touch union leadership who believes the same old playbook will be effective,” Christie said.

While some states have turned to privatization to help deal with fiscal crises, it has yet proved to be a “silver bullet” for solving budget deficits, according to Jon Shure, deputy director of state fiscal projects for the Center on Budget & Policy Priorities.

“It’s hasn’t proved to be that successful,” said Shure, citing an effort in Indiana where the state privatized its welfare eligibility services and it created all sorts of problems, including lost documents and delayed benefit approvals. The state ended up firing the lead contractor in the effort. “What sometimes happens is you end up hiring the same people to do the same job for less pay and less benefits, which isn’t good for the economy,” he said.

Calls to the Communications Workers of America, the state’s largest public employee union, were not returned.