Past Event

Got Quarters? Putting public services in private hands

Parking a car in Chicago is going to get even more expensive with Mayor Daley’s plan to privatize the city’s 36,000 parking meters. Under the plan, meter rates would increase to $1 an hour. By 2013, drivers will pay $6.50 an hour to park at downtown meters.

When the City Council Finance Committee met last week to debate the plan, aldermen complained about everything from soaring rates to end of parking-meter holidays, "to allowing the private operator to write parking tickets as frequently as every two hours at two-hour meters," the Chicago Tribune reported. Ald. Danny Solis (25th) said: "I could see people having to carry big bags of quarters – big bags of money – to deal with" these rate hikes.

Under the plan, Chicago pockets $1.2 billion to allow the partnership of Morgan Stanley Infrastructure Partners and LAZ Parking to lease and manage the city’s meter operations for 75 years. By leasing the meters, Chicago sought to fill a $150 million budget hole. The city’s Chief Financial Officer Paul Volpe, said there were two choices:"cutting $150 million in expenses or raising $150 million worth of taxes."

Privatizing public services has become more common as city and state governments face budget shortfalls-especially during economic downturns. Already the city has deals to lease Midway Airport, the Skyway, and downtown parking garages. On the national level, outsourcing of federal dollars increased 100 percent, according to a September 2007 study by the United States Public Interest Research Group of Washington D.C. The federal government is now the private sector’s largest customer.

A hundred years ago, private companies did a lot of what is called "government work," providing firefighting, trash collection, and water services. But charges of fraud and nepotism caused private contractors to lose favor and government stepped in. Then "about 30 years ago, the pendulum started to swing the other way and privatization came back-driven by University of Chicago Economist Milton Friedman, enacted in a massive policy shift by Ronald Reagan, and proliferated by Grover Norquist and the neocon agenda," Amanda Witherell, a staff reporter for the San Francisco Bay Guardian, wrote in article published by Urban Habitat. Recently NPR reported, "The Bush administration has hired private industry to take over more of the government’s work than any administration ever," to the tune of $400 billion last year for everything "from the Forest Service to the CIA." 

However, not everyone disagrees with privatization. "When it’s done properly and with care, privatization harnesses the powerful market forces of competition, accountability and incentive. It means that government officials don’t have to be hemmed in by an indifferent bureaucracy; instead, they can ‘shop around,’ as other consumers do, for the best available buys," said Lawrence W. Reed, President of the Mackinac Center for Public Policy.

Is it smart public policy to turn over public services to private firms? In the long run, does privatizing help or hurt the public? Which serves the public best-government or private entities? Does having private contractors offer services drive up the cost of living in the city? What other services do you see ripe for privatization? Do you agree, as some have argued, that the trend toward privatization is a move away from democracy?

Suggested Resources

For more information, call 312.422.5580.