What Happened?
The Louisiana Office of Motor Vehicles launched a pilot program that outsources the management of drivers’ license renewal operations to private contractors. The privatization strategy aims to accelerate the renewal process while increasing costs for residents.
The Goal
By contracting with private companies, the Office of Motor Vehicles in each city can offer renewal options to more residents in a shorter period of time, which will reduce long lines and wait times. To accommodate the more convenient services, a $18 service fee has been added to the cost of renewing a license. So far, the pilot program is being tested in Baton Rouge and Metairie. If successful, the strategy will be expanded throughout the state.
The pilot program is not a replacement for existing Office of Motor Vehicles in Louisiana. Rather, the privatization program is focused on providing residents with additional options for license renewals. Because the state is not providing the private companies with any funding for the project, the $18 renewal transaction fee keeps the operations running. Therefore, residents have the option to pay more for added convenience or stick with traditional channels at no extra cost.
Privatization Debate
There are strong voices on both sides of the privatization discussion, some arguing privatization is an obvious evolution of the public sector in light of tightened budgets while others feel allocating taxpayer money into the pockets of companies is a disservice to the community.
In a piece for Forbes, Strategic Partnerships’ CEO Mary Scott Nabers suggests “public-private partnerships are revolutionizing the business of government” and when implemented ethically are a much needed change to distribution of public services. The gap between tax revenues, increasing unfunded pension liabilities and demands for infrastructure improvements and developments are weighing heavily on local governments. Privatization strategies that generate money for companies and local governments offer solutions to these problems without sacrificing quality of service to residents.
On the other side of the fence, Paul Krugman and supporters highlight instances of corruption and decline in value to the community some privatized public services have demonstrated. Krugman explains that many state and local governments are launching privatization campaigns with a narrow vision of gaining access to much needed cash, often at the expense of taxpayers and services provided to them. Studies into the privatization of some prisons, for example, illustrate how public-private partnerships can save money but only achieve these endpoints by removing worker benefits and support.
In The Public Interest recommends communities considering privatization of certain public services should take certain precautions to avoid common pitfalls outlined by Krugman without missing out on the opportunities explained by Nabers. The organization instructs lawmakers to create protections by promoting fair contracting standards that keep the public interest at the forefront of all negotiations and implementation of tactics. Furthermore, the group calls for public deliberation and participation in the contracting process to ensure all projects are transparent to a taxpayer audience.
Make It Work
Gov1 has covered privatization stories in depth, ranging from public-private partnerships for toll services to outsourcing tasks for cemetery maintenance.