State Watchdogs Warn of Potential Abuse

Monitors needed to prevent privatization from wasting taxpayer money

If New Jersey is going to privatize state operations, it better make sure it installs monitors to oversee what contracts it outsources to prevent waste of taxpayers’ dollars and other abuses, a trio of government watchdogs warned today.

In the first hearing of the New Jersey Privatization Task Force, the state’s Inspector General, Controller and the executive director of the State Commission of Investigation detailed their investigations of previous efforts at privatization, many of which not only wound up costing more than services provided by the public sector but also led to a deterioration in service.

“We don’t have too many watchdogs in our state. If anything, we have too few,’’ Alan Rockoff, executive director of the SCI told the panel at a hearing in the Statehouse annex. His office has probed problems involving the privatizing of motor vehicle licensing and registration, influence peddling in the awarding of contracts to run the automobile emissions inspection program and the E-ZPass program.

One common theme ran through all those investigations, Rockoff said. “Waste and abuse of the public treasury will occur if no one is watching the store.’’

The task force, which plans two other public hearings, has been directed by Gov. Chris Christie to expect to report back to the Governor by the end of May with the charge of identifying at least $50 million in savings that could be incorporated into the budget for the coming fiscal year, according to Dick Zimmer, a former Republican congressman who is chairman of the task force.

New Jersey’s Inspector General Mary Jane Cooper said her office’s investigations into the failed School Construction Corp. found that oversight of the project had “either been poorly thought out or had been eroded.’’ She indicated the same was true for the awarding of a contract to provide inmate health services. Before privatizing a state service, a monitor must be established to ensure the public is getting what it needs from the private entity, she said.

Despite the horror stories, Cooper said she believed privatization could work if set up properly. Others said the decision to privatize services was a policy decision that ought to be made by the Governor and Legislature.

Leonard Gilroy, director of government reform at the Reason Foundation, a Washington D.C. think tank, generally lauded privatization efforts, saying it is not an ideological issue, having been embraced by Democrats and Republicans alike.

“Privatization is a tool. It can be done well; it can be done poorly. When it’s done well, there’s a large body of research that points to its benefits,’’ Gilroy said. When done well, cost savings ranging from 10 to 25 percent can be achieved, he said.

Others also said the state could benefit from turning to the private sector. Sal Risalvato, executive director of the New Jersey Gasoline C-Store Automotive Association, said the state could save a minimum of $13 million by turning most automobile inspections back to privately licensed garages.

Union leaders who attended the hearing, however, were unconvinced.

“If you listened to what the SCI, Inspector General and Comptroller said, you have to wonder why they are even thinking of privatizing any services,’’ said Bob Purcell, a spokesperson for the Communication Workers of America. “It has cost the state far more than it has saved it.’’

Jeff Tittel of the Sierra Club of New Jersey said he is concerned the task force was created by the Christie administration as part of an overall plan to weaken environmental protection and enforcement in New Jersey.