It’s spring-cleaning time, and this would be a fine moment for the city of Los Angeles to drag all of its old items outside and hold a big garage sale.
Indeed, if the city were to follow through on Mayor Antonio Villaraigosa’s notion of selling the Los Angeles Convention Center and Los Angeles Zoo, or at least selling the operating rights, we’d get a two-fer: an improved city budget and a spark of business activity.
Look at what Chicago is doing. A company gave the Windy City $1.2 billion to take over management of the city’s parking meters. A consortium last year agreed to give Chicago $2.5 billion to take over Midway Airport.
With numbers like that, L.A.’s expected budget deficit of $500 million or so next year suddenly looks manageable.
What’s more, it’d be great for businesses to take over operations of city assets. Remember, it’s the private sector, not the public one, that creates wealth. Assets in the hands of businesses would jolt the local economy.
But why stop with the zoo and the Convention Center? Why shouldn’t the city sell off its golf courses, airports, animal shelters and parking lots? I mean, hold a real garage sale.
“It’s difficult to even know everything the city has that could be privatized,” said Leonard Gilroy, who’s director of government reform at L.A.’s Reason Foundation. Besides obvious things that can be sold buildings and utilities some functions can be outsourced, such as payroll processing and fleet maintenance.
One traditional argument against privatizing is that city-operated facilities keep costs low to customers. But it’s hard to make that argument since a Superior Court judge ruled earlier this month that the city’s Department of Water and Power had been gouging customers and sending tens of millions of dollars each year to the city’s general fund.
There’s really little rationale for a government to own utilities. After all, telephone systems have been owned and operated by the private sector, and we’ve always managed to get a dial tone.
Privatization is not new, of course, but what is new is that Democrats seem to be warming up to it. Chicago Mayor Richard Daley, a proponent of privatizing, is a Democrat and so is New York’s former governor, Mario Cuomo, who somewhat famously said, “It is not a government’s obligation to provide services, but to see that they are provided.”
Locally, outgoing City Controller Laura Chick got the privatization ball rolling a few months ago when she listed lots of assets including the operation of Ontario International Airport and part of the water system that could be contracted out. Mayor Villaraigosa took up the mantle by pushing the privatization of the Convention Center and the zoo.
That’s important because, in a Nixon-and-China kind of situation, Villaraigosa and the other Democrats are in the best position to handle the objections from unions, who are the ones most opposed to privatizing and contracting out services to the private sector.
It should be a simple exercise really. All the city needs to do is look at every service and asset it runs and check the Yellow Pages to see if the private sector offers it. If so, then the proper question should be: Why not privatize it?
Charles Crumpley is editor of the Business Journal. He can be reached at
[email protected].
