Privatization & Public Safety

“I can tell you right now how to shave $10 million off the city budget,” a DeKalb business person told me recently.

How?

“Privatize everything.”

It’s an extreme view redolent of anti-union sentiment and we will not be hearing pronouncements from city hall about contracting out for basic services anytime soon, I’m sure.

However, that doesn’t mean privatization isn’t going to happen in DeKalb. Due to ongoing budget woes, some version of it may stumble in through the back door.

Just to be clear, I am generally pro-union and not a fan of privatizating basic services, as I believe it would lead to unprecedented levels of patronage and other corrupt practices within our current political system. So this is a diary about avoiding that step if we can/if we want to.

Get Out the Crystal Ball

Here is my prediction. Any day now, city administrators will admit their revenue projections were way off and that the touted (pre-election) budget surplus is no more. They will probably threaten layoffs. If the shortfall is bad enough, actual layoffs may occur, with or without tax increases. In the case of laying off public safety employees (police, fire, public works) without first trying cuts to administrative services, there should be a huge public uproar; and this scenario is entirely possible, as the administration has already set the stage to scapegoat the unions over budget issues with regular remarks about their hands being tied by contractual obligations.

Failures of Imagination

Some communities contract for ambulance services, while others have begun turning to privatization of police functions (see here, here and here). DeKalb government is nothing if not a sucker for the latest fads but this one concerns me gravely.

Most obviously, there’s the problem of agenda. Public police forces are charged with protecting the citizens of the cities and towns over which they have jurisdiction. Of course, there are instances of policemen overstepping their bounds, but these are exceptions, and the police officers and departments are ultimately responsible to the public.

Private police officers are different. They don’t work for us; they work for corporations. They’re focused on the priorities of their employers or the companies that hire them. They’re less concerned with due process, public safety and civil rights.

Also, many of the laws that protect us from police abuse do not apply to the private sector. Constitutional safeguards that regulate police conduct, interrogation and evidence collection do not apply to private individuals. Information that is illegal for the government to collect about you can be collected by commercial data brokers, then purchased by the police.

Training and regulation is another problem. Private security guards often receive minimal training, if any. They don’t graduate from police academies. And while some states regulate these guard companies, others have no regulations at all: anyone can put on a uniform and play policeman. Abuses of power, brutality, and illegal behavior are much more common among private security guards than real police.

My own personal view is, if s/he’s carrying a gun, give me a sworn officer every time. At the very least, should we end up considering such a scheme please let it be with our eyes open.

Something that’s gone pretty much unnoticed is that more companies in DeKalb have begun hiring private security guards. Certain decisions–such as how City Council ends up defining the word “premises” in the revised liquor ordinance–could accelerate this trend. It’s as if the city never tires of finding ways to add to the cost of doing business here, though I suspect it’s merely ignorance of the side effects of their actions.

What to Do

I do not believe DeKalb will feel the need to consider privatizing public safety positions–or leave them empty–if officials take certain steps.

Start off by getting rid of the blanket hiring freeze and commit to staffing public safety functions fully. Inability to prioritize is a huge error. I’ve seen this in other settings. It arises from a desire to keep adding feathers to one’s cap to the point of failing to notice that the cap itself is getting raggedy through neglect. Proper prioritizing may lead to dropping other programs like so much ballast, to save the ship from sinking. Do it. Get back to the basics.

Secondly, some administrative services could and maybe should be privatized to combat inefficiencies arising from a growth in divisions’ employing expensive specialists for work that generalists could do. For example, we’ve got Legal taking on deputy liquor commissioner duties that used to be done (and in non-Home-Rule communities must be done) by the city clerk at half the salary; we’ve got I&T doing routine tasks (e.g., uploading documents) that could be handled either by designated persons in each division or by a more general Information Service. Legal services are routinely contracted by many communities (DeKalb is an exception, actually) and firmly defining functions via contract would undoubtedly cut costs. Task analyses in other divisions would expose duties that could be passed on to non-specialists and those divisions restructured accordingly. The two examples used here have budgets totalling $1.5 million, therefore are well worth this kind of scrutiny.

Next, Council should vote down contracts that call for the usual raises during a deep recession of indeterminate length. Last year, Council cut its own salaries by 10% in a symbolic gesture of shared sacrifice, yet failed to demand the same in the new AFSCME contract and the management pay plan. Perhaps a good place to start would be to hire outside negotiators in the first place. Think about the inherent conflicts of interest in contract negotiating teams made up of management–and take a good look at what management got after AFSCME got theirs, in the name of “equity.” The temptations are clear.

Fourth, the city should avoid additional debt. General Fund debt service alone costs us $1.5 million per year and if you add TIF debt service and loans being repaid out of two enterprise funds (Water, Airport) it adds up to $4.4 million per year that can’t be used for anything else.

Do I even need to mention, we badly need to rethink how we do TIF in this town?

I’ll present the final ideas separately, in the next section.

Magic Numbers

The city currently budgets $1.5 million annually to cover overtime, mostly for fire and police departments, and in view of the staffing situations I’m guessing the actual amount may end up being more. It is not a huge leap to believe that adding staff (not by itself, mind you, but in conjunction with tweaking recall procedures and so forth) would result in a budgetary gain.

What the “magic numbers” are for these departments–IOW, where we see that gain–we cannot answer because we do not have enough information at our disposal. For example, there exists an incredible situation wherein our chronically understaffed fire department provides contracted services to NIU and Cortland yet cannot answer whether those services are adequately compensated. Even more incredibly, as far as I can tell, nobody in city government seems to care.

Another area where we should seek “magic numbers” is in taxation. Blaming the entire drop of sales tax revenues on the overall bad economy would be a huge mistake because taxation always involves leakage. One type of leakage is economic leakage, a kind of general recognition that every dollar going toward taxes (or into savings, for that matter) is a dollar that cannot be spent on goods and services.

A second kind of leakage is called sales or business leakage, defined as losing expected sales for unnecessary reasons. For example, let’s say a hotel has its own dining room. One could reasonably expect guests of the hotel to use the dining room as a matter of convenience, so any time guests choose to leave the hotel for a meal it is considered a probable leak and a good manager will try to identify the source (pricing, marketing, customer service, etc.) and make a change that acts to “plug” the leak.

As you can imagine, there are myriad reasons for leakage. Most are up to the business owners to identify and to fix, but they can’t stop leaks due to over-taxation or improper regulation, except to move away.

The city contributes to both taxation and regulatory causes of leakage, and I suspect it is because officials don’t fully understand the “80-20 rule.” I first heard about this rule in a class on advertising, though at the time we called it the “heavy user rule.” One assumes that advertising is pretty much about attracting new customers but if you pay attention you notice a lot of it is about getting your established customers another reason to buy. This is because, whether you are talking about liquor or lumber, most of your sales will come from a small percentage of customers called “heavy users.” Hence the Bisquick ad includes not just a coupon but also a new recipe. You get the picture.

Heavy users are necessarily more taxation sensitive. Think about the sales tax on a $50 purchase of lumber as opposed to a $50,000 purchase, or how a frequent business traveler will likely take into consideration the hotel-motel tax rate, because for the heavy user it adds up.

So the construct goes that 20% of the customers account for 80% of the sales, which of course actually varies in practice by industry but as a basic rule of thumb it is sound. Those who know the rule instantly understood why the citywide smoking ban was so devastating to the restaurant and bar trade, and how our sales tax rate currently acts as retailer repellant.

What’s the magic number that would plug up the sales tax leak? I don’t have that answer, but I know who does, and city administration would serve us all better by consulting them in a “heavy user” sort of way.