Every tax is a pay cut. Every tax cut is a pay raise.
Citizens for Limited Taxation
|Pacheco Law costs millions, report says||October 19, 2002|
|Rick Klein||The Boston Globe|
The Pacheco Bill is regarded as the strictest anti-privatization statue
in the nation.
The Commonwealth of Massachusetts passed the Pacheco Bill in 1993 with the enthusiastic support of the state's public employee unions. State Senator Marc R. Pacheco, a Taunton Democrat was the law's lead sponsor.
"This is a situation where 49 states are going in one direction, and we're going in another", said Charles Chieppo, a Pioneer Instatute spokesman. "When you can't have any competition, when it's a monopoly, taxpayers are getting killed.
The Pacheco Law requires agencies seeking to contract out a service to prove not only that such a move would save money, but that it would save money even if state employees were working at an optimum level, "in the most cost efficient manner".
"The cost cutting efforts that could be derived by privatization are now stillborn under this law", said Stephen P. Crosby, Swift's chief of staff... The constraints are so great that you don't even go through the exercise."
Michael J. Widner, president of the nonpartisan, business-backed Massachusetts Taxpayers Foundation said the Pacheco Law suppresses competion and drives up costs because it is skewed in favor of keeping services in the public realm. It would be better if public unions and private contractors could bid side by side on state services. The winner would be the taxpayer.
|New interest shown in privatization||May 6, 2003|
|Rick Klein||The Boston Globe|
A decade after Massachusetts passed the strictest-in-the-nation
antiprivatization statute, support for the law appears to be slipping in
the Legislature, possibly laying the groundwork for privately-run state
highway maintenance and UMass dining halls, shifting thousands of jobs to
the private sector.
House leaders have recommended that the state's transportation agencies and the University of Massachusetts system be freed of all outsourcing limitations for one year, as a test. If it goes well, it could be expanded to other agencies.
With the state facing its bleakest fiscal situation since the early 1990s, Romney administration officials -- who asked for a more widespread test than the House has proposed -- say privatization offers a $10 million savings just at UMass and the state Transportation Department.
"It's a real opportunity to save money, to show that this can work," said Charles Chieppo, Romney's policy director in the Executive Office for Administration and Finance, who would like to see the law eliminated. "For the first time, there's some official movement on it. It's a good sign.
But the state's public employee unions are working feverishly to keep the 1993 law intact, arguing that rolling back the provisions of the so-called ''Pacheco Law'' would result in slashed salaries for thousands of workers and not save taxpayers a significant sum. Privatization is when the state hires a private company to perform a task it previously handled itself. Companies can often do the job more cheaply by paying lower salaries, offering fewer benefits, and/or doing the work more efficiently.
A budget amendment that would undo the House Ways and Means Committee recommendation will be debated this week, possibly as soon as today, and labor unions have tended to hold sway in the Democratic-controlled Legislature. Republican House members have offered an amendment that would eliminate the Pacheco Law entirely.
Senate leaders have pronounced themselves open to serious changes in the law, but the chamber is also home to Senator Marc R. Pacheco, for whom the bill is named. Pacheco, the law's fiercest protector, said he's willing to discuss minor changes, but believes meaningful protections must remain to keep private firms from slashing wages and benefits and to ensure that taxpayers get their money's worth.
"If you don't have any standards, obviously you can cut costs by cutting wages and benefits," said Pacheco, a Taunton Democrat. "You don't need a test run for that."
The Legislature passed the Pacheco Law over then-governor William F. Weld's veto, in large part in reaction to a frenzy of privatization in the early 1990s. The law requires agencies seeking to contract out a service to prove not only that the move would save money, but that it would save money even if state employees were to work in a hypothetical "most cost-efficient manner."
Would-be bidders must include the cost of oversight, such as inspections and audits, pushing up the price for contractors that wish to take over work performed by public employees. Firms cannot win business if they'll pay less than the lowest amount the state pays its employees for similar services, and the state auditor has final power to approve or reject privatization bids.
The Pacheco Law's backers argue that it has prevented private bidders from conducting a "race to the bottom" to win business, and has kept the administration from handing out business to political friends. But detractors say the bar for approval is so high that few contractors even try; in the past 10 years, only eight proposals have been put forward, compared with 36 privatization contracts doled out by the state over the previous three years.
House Ways and Means chairman John H. Rogers said it's time to cut through the rhetoric on both sides and figure out whether the state can save significantly through privatization. His committee recommended giving UMass and transportation officials the power to sign two-year privatization contracts anytime during fiscal 2004, which begins July 1.
"There's really no conclusive evidence that privatization of government services either benefits or harms state government," said Rogers, a Norwood Democrat. "We want to find out, because if we can save money, and pass on the savings to human services, that's going to be good for the Commonwealth." But union officials say that even a limited experiment with looser standards could be devastating to taxpayers and state workers. Without the Pacheco Law's restrictions, a private bidder could slash salaries to win a bid and then allow costs to escalate to line his own pockets, said Peter Wright, a spokesman for Council 93 of the American Federation of State, County, and Municipal Employees.
"You have a lot of hard-working people who go to work every day at UMass that could lose their jobs here, or be forced to work for less," said Wright, whose union includes about 1,500 UMass food service, clerical, and maintenance workers. "The concern I have is as much for the members [of the union] as for the taxpayers. All the law really does is require a cost analysis"
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