New Jersey urged to privatise, 'embrace' PPPs

A task force convened by Governor Chris Christie recommended the passage of enabling legislation for PPPs as well as the creation of a ‘centralised privatisation entity’ to oversee privatisation of numerous state services. Task force chair Richard Zimmer believes the recommendations will become ‘an action document’ for Christie.

New Jersey should create a centralised office to manage privatisation of state assets and services and enact a “broad-based and flexible” law  enabling public-private partnerships for infrastructure projects.

That is the conclusion of a 53-page report drafted by a five-member “New Jersey Privatization Task Force” convened by Republican Governor Chris Christie.

“I anticipate that this is going to become an action document used by the governor,” said Richard Zimmer, the chair of the task force.

A spokesperson for Christie said the task force's recommendations are currently being evaluated but the govenror has yet to decide “whether or not all, some or any of them will become actual policy proposals”.

I anticipate that this is going to become an action document used by the governor

Richard Zimmer

Christie created the task force in March, just days before submitting to legislature “the most challenging budget in our history”: a $2.2 billion deficit in the state’s remaining 2010 budget and a $10.7 billion hole in next year’s budget. The goal was to have the task force find ways the state could deliver services in a “more efficient, cost-effective way”, Christie said at the time.

The task force ended up identifying annual savings of more than $210 million if all of its privatisation recommendations are fully implemented. The largest chunk of the savings, $35 million, would come from privatisation of manual toll collection on the New Jersey Turnpike. Smaller savings would come from proposals as diverse as outsourcing printing to security, parking and vehicle maintenance.

Christie: looking to
privatisation to
help balance budget

One item ostensibly missing from the list of recommendations was a wholesale privatisation of the Turnpike. Under New Jersey’s previous governor, Democrat Jon Corzine, the state had considered leasing out the New Jersey Turnpike and other roads to raise up to $38 billion for the state. But the proposal relied heavily on toll increases, so it proved very unpopular with voters and helped Christie defeat Corzine for the governor’s mansion in November 2009. So when the task force began its work, Governor Christie said “two things were off the table: one, the state police, and the other was toll roads”, Zimmer recalls.

But Zimmer believes there’s more at stake than just privatising assets and services to save money.

“This is more than just about balancing budgets. It’s about providing more effective service at greater value to taxpayers and it should be a permanent process that continues regardless of whether times are good or bad,” Zimmer said.

It should be a permanent process that continues regardless of whether times are good or bad

Richard Zimmer

To ensure that the privatisation process will outlast New Jersey’s budget crisis, Zimmer’s task force recommended the creation of a “centralised privatisation entity,” which would assist government agencies in developing business cases for privatisations and disseminate best practices.

“If I had to encapsulate the big concept in a nutshell, its having an entity that can help agencies figure out how to do smart privatisation,” said Leonard Gilroy of the Reason Foundation, one of the advisors to the task force.

“I think that’s the major thing they’ve put out there,” Gilroy added.

Similarly, the task force also recommended the creation of an “advisory body” for public private partnerships (PPPs), similar to California’s Public Infrastructure Advisory Commission.
But before that can happen, New Jersey policymakers must “embrace PPPs” and “pass broad-based enabling legislation to facilitate them”, the report urged.

Zimmer, a veteran of both houses of the New Jersey legislature, is optimistic the lawmakers will indeed embrace PPPs.

“I think there’s a pretty good chance that it will happen,” he said.