Bellows bill would safeguard taxpayer dollars from bad privatization schemes

A bill introduced by Sen. Shenna Bellows, D-Manchester, to safeguard taxpayer dollars by tightening requirements on privatization of existing state services was the subject of a public hearing in the Legislature’s State and Local Government Committee on Monday.

LD 1458 “An Act To Protect Taxpayers in the Privatization of State Services” is modelled on a successful law that’s been on the books in Massachusetts for more than 25 years. The bill would require contractors to meet several criteria proving that privatization is in the public interest before receiving a contract to perform duties previously handled by state employees.

“The challenge with privatization in politics is that too often decisions to outsource are based on relationships or perceived political advantage rather than an objective evaluation of the facts,” said Sen. Bellows. “In other countries and other states, private contracts are the source of real corruption in government where donors pay to play and to receive the lucrative public contracts.”

The bill creates a process for review of any privatization of state services ensures that: quality of the service is maintained; cost of the service under privatization, including lost income tax revenue, will be cheaper; the entity with whom the state is contracting has a proven track record of compliance with all relevant state and federal laws including safety and health, nondiscrimination and environmental; and privatization is in the public interest.

“There are times when outsourcing a particular service is necessary and important. That includes circumstances where there’s a lack of in-house expertise or where you can truly save the state money over the long term as well as in the short term without cutting corners that undermine the public interest,” said Sen. Bellows. “But there should be a process, like the one outlined in this bill, to determine that the benefits of privatization are real.”

Sen. Bellows submitted the bill after several high-profile problems with the provision of state services by private contractors.

For example, in 2016, the state outsourced a bridge painting job in Portland to a firm that didn’t understand lead paint removal, resulting in significant site contamination and increased cleanup costs to the state and the taxpayers and an environmental and health hazard.

And in 2015, it awarded an out-of-state company with a contract to operate the state’s largest and most heavily trafficked drawbridge, which had been operated by state employees for years. The contract saved zero dollars for Maine taxpayers, and the company immediately advertised job openings stating “no experience required.”

Lastly, in 2016, the state outsourced the administration of several welfare programs to an out-of-state company that has been sued at least a dozen times in state and federal court in less than five years for workplace discrimination, wage, and disability and personal injury disputes. Oversight of the contract will cost the state more money that maintaining the service in-house.

The Maine State Employees Association and American Federation of State, County and Municipal Employees both testified in favor of LD 1458 at the public hearing.

LD 1458 faces further action in the committee, as well as votes in the Maine House and Senate.