Seriously, The Private Sector is Cheaper and More Efficient than Government

July 27, 2015

By Matt Crumb
MacIver Institute Research Associate

There have been two great examples in recent months of how local units of government can utilize the private sector to bring about real savings for their taxpayers.

Imagine that, the private sector can do something better and cheaper than government. It is upsetting that more government officials cannot wrap their heads around such simple math.

The first happened in Pierce County, where the county board approved a contract with private company CBM Management Services to provide food and laundry services at the Pierce County Jail. Instead of the $179,000 currently spent on these services, the cost to provide these services will be $130,000 to $145,000.

That’s a savings of 19 to 27 percent.

Of course, the ability of Pierce County to contract out this service in the first place is all thanks to Act 10 – Wisconsin’s 2011 public sector collective bargaining reform law. Before Act 10 went into effect, local unions had a monopoly on jail services. Now, local officials have the ability to actually shop around for the best deal.

The second local government deal that will save some cash is the Onalaska School District’s decision to switch off of a state-run property insurance program and into the private insurance market. This move will decrease their premiums from $237,000 to $210,000, an 11 percent reduction.

The Local Government Property Insurance Fund (LGPIF) is an ancient government program that provides insurance for local governments. The problem is that the LGPIF has recently turned a deficit, potentially putting taxpayers at risk of a bailout. There are also plenty of private organizations that can do the same thing for a lot less money.

Unfortunately, the legislature could not bring themselves to end the LGPIF – like Gov. Scott Walker had proposed in his original budget plan – even though the Onalaska development clearly shows there are taxpayer savings to be had.

While these examples are small, they show the potential for government to partner with the private sector to provide services, rather than creating more bureaucracies.

Perhaps the most pronounced example of private sector collaboration in Wisconsin is Waukesha County. Waukesha County has privatized over 60 public services, including housekeeping services, recycling collection, as well as county jail services. Privatization allows Waukesha County to keep spending and taxes down. In fact, Waukesha County is one of only 10 counties to not opt for the local 0.5 percent sales tax that is allowed under state law.

Unfortunately, the other 62 counties couldn’t help reaching into to taxpayers’ pockets for a little more spending money.

With Wisconsin’s property tax burden competing as one of the highest in the country, taxpayers should embrace efforts to utilize the nimbler private sector for their government services.