As the legislative session comes to an end, the looming budget deficit is putting increasing pressure on the state’s leaders to consider draconian measures, typified by the governor’s call to lay off 1,000 state workers and privatize various government functions.
For cash-strapped governments, privatizing is a common way to try to save money. And for public-sector unions, it’s a growing threat to their membership.
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This quandary, and the broader conflict between employers’ need for flexibility and workers’ need for job security, was the focus of a conference at Providence College on June 7 sponsored by the school’s Quirk Institute of Industrial Relations.
On hand to discuss the issue were Daniel L. Beardsley Jr., executive director of Rhode Island League of Cities and Towns; J. Michael Downey, president of Rhode Island Council 94 of the American Federation of State, County and Municipal Employees; Paul Lemont, Seekonk town administrator, and William McGowan, business manager of Local 2323 of the International Brotherhood of Electrical Workers.
Beardsley said shortages in funding and the continuing need for public services have made privatization a necessity. “Privatization of public services is a phenomenon facing municipal employees,” he said. “And the ongoing trend to incorporate privatization can be seen at all levels of government.”
Moreover, Beardsley said, recent events have created a “perfect storm” that will make privatization even more crucial.
Last year, he noted, the General Assembly approved a Senate plan that capped annual property tax increases at 5.25 percent for fiscal 2008, with gradual reductions to 4 percent by 2013. Previously, the cap was 5.5 percent, and it was less stringently applied.
That change is “creating budget chaos at the local level and for the school systems,” he said. And with the state facing a budget crisis of its own, Beardsley noted, there’s no state money to offset the revenue the municipalities can no longer collect.
Yet simultaneously, he said, the citizenry is demanding “better public education” and “wanting the expansion of public services,” while “at the same time, they’re looking for lower taxes, and they’re looking at city employees.”
Those factors combined, Beardsley said, will have “a dramatic effect on public employees. It is not a feeling of anti-labor; it is the aftereffect of the perfect storm.”
Downey agreed that the effect is being felt by municipal employees, many of whom his union represents. “Council 94 seems to be the eye of the storm,” he said.
Downey talked specifically about the R.I. Veterans Home, where the R.I. Department of Administration is considering privatizing the kitchen staff. That is “picking on the poor,” he said, because it would be some of the lowest-paid employees who would be replaced: those in a pay grade that starts at $28,300 and goes to $29,500.
“It’s not the management [Gov. Donald L. Carcieri] wants to privatize,” he said. “They keep posting $100,000 jobs, and that’s insulting when you make $20,000 and you’ve had to worry over the last five weeks about if you’ll have a job.”
But while the state may be considering privatization as a budget solution, Lemont said he doesn’t think it makes financial sense – a point he said he learned when he looked at outsourcing the payroll department in Seekonk.
“It can be done cheaper, better and with more controls in my house,” he told the crowd. “The taxpayers aren’t demanding outsourcing; they’re demanding efficiency.”
But he noted that both sides need to be willing to talk and work together.
“It’s easier to send it away than to sit down and pound the table,” he said. “But I would hope that we can sit down and avoid the outsourcing.”
Beardsley said privatization only works if it’s done right. “Privatization has its place if those state or local officials do the diligence that’s necessary to ensure that those offerings of private employees to do the work are qualified and meet the criteria of what the department or agency’s mission is,” he said, “and that there are no hidden costs involved or add-ons in cost implications.”
Beardsley also said privatization is not easy.
“One has to be mindful that one cannot snap [one’s] fingers and privatize any segment of the public sector work force,” he said. “They have rights under Rhode Island law. [Government officials] have to confer with them to offer the bargaining unit a chance to respond.”
