Budget negotiators in Olympia are debating whether to privatize a host of little-seen government functions that collect state agencies’ mail, pay their rent, print their documents and maintain their cars.
The Senate budget calls for contracting out more of the state’s back-office work, a small piece of the savings proposed by the plan but another sign of this year’s greater influence for the Legislature’s minority Republicans and centrist Democrats.
State employee unions are becoming louder in opposing the plan, even as changes are being considered in negotiations. Democratic Gov. Chris Gregoire wants lawmakers to let her administration pick the areas for contracting rather than ordering up a list of targets.
The Republicans’ lead budget negotiator, Sen. Joe Zarelli, said it’s obvious where money can be saved.
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“These are things that government’s doing that there are 100-plus people in the private market that are capable of doing those kinds of services,” said Zarelli, of Ridgefield. “Government’s not in the business to deliver services that are commonplace in the market.”
Under the Republicans’ proposal, if private bids didn’t turn out cheaper than in-house costs, the contracting process would be canceled.
A state law that took effect in 2005 mandates that before contracting, unionized employees have 90 days to try to show they can do the work cheaper. Republicans want to exempt back-office services from that process.
“What is the harm of using this process where employees have an option to present their thoughts and suggestions?” asked Jeanine Livingston, contracting compliance manager for the Washington Federation of State Employees. “Without engaging in the dialogue with front-line staff, you’re cutting out a significant stakeholder that has the eyes and ears on the ground, so to speak.”
In some cases, the union has stopped proposed contracting in its tracks, allowing state-employed workers like graphics designers or janitors to get the work. But those amount to less than 1 in 5 cases involving federation members, the union says. More commonly, the contracting process moves forward – such as Seattle community colleges turning their bookstores over to Barnes & Noble, Livingston said.
But Republican Sen. Michael Baumgartner of Spokane said not enough “meaningful privatization” has been done under the law, which he said bogs down the contracting process.
The federation is pushing back against privatization on several fronts. As it holds dozens of gatherings around the state, including one in Tacoma today for state employees to make phone calls to lawmakers, it is urging them to stress the contracting issue.
“In the rush to get a budget agreement, legislators may decide to throw the services you provide under the bus – and hand them over to the same corporations that already get billions in state tax breaks,” says one broadside on the union’s website.
The union has shown it’s willing to back up its words with legal action. In a dispute over whether state officials overstepped their authority in contracting out for child welfare services, the federation has filed a lawsuit to stop the contracting. It’s scheduled to be heard by a Thurston County Superior Court judge Friday.
MERGER PLANS STUCK IN LIMBO
Decisions on outsourcing will have consequences for Gregoire’s proposed consolidation of the state’s back-office functions into a single agency.
As conceived in state budget plans, the new Department of Enterprise Services would take over the duties now done by the printer and by the Department of General Administration, which runs leasing, mail consolidation and the state motor pool, among other duties.
Most of the governor’s proposals for agency mergers never gained much traction with state lawmakers, including mergers targeted at education administration, the management of parks and wildlife, and agencies devoted to helping racial minorities.
The exception was Enterprise Services, which would incorporate parts of the state agencies that manage personnel, information technology and financial management along with GA and the printer.
Both the House and Senate agreed to the merger in their budget plans. But only the Senate called for the new agency to privatize several of the services offered by its predecessors.
Gregoire opposes plans to eliminate the state printer next year, saying it could cost more than it saves.
In a recent audit, State Auditor Brian Sonntag said privatizing printing should be considered but wouldn’t necessarily save money. Sonntag instead recommend lawmakers make it easier for private print shops to compete with the printer for state jobs. Much of the work is already outsourced, more than $10 million worth of it in 2010.
While the printer has had many detractors in recent years, the motor pool, consolidated mail service and real estate services have received less attention.
Sonntag did suggest in an audit that General Administration could contract with commercial real estate brokers to handle lease transactions, freeing up public employees to focus on an overall strategy for leases that are worth $180 million in payments per year.
A performance audit is in the works for the mail service, which delivers between Olympia’s government buildings and cuts down on postage costs.
Though the auditor recommended changes to the motor pool in 2007, he didn’t weigh in on privatization. The pool has 1,871 vehicles, separate from thousands of other vehicles managed by the state patrol and other agencies.
Senators called for saving $1.9 million in six months of 2013 by contracting out for the four services, but some are skeptical of the budgeted savings.
“There is no study that’s ever been produced that says the state will save money through this mechanism,” Sen. Craig Pridemore, D-Vancouver, said.
In the House, Rep. Sam Hunt, D-Olympia, said Democrats are fighting against specifying the services for privatization in the budget.
And the governor’s budget officials want lawmakers to give them more time to figure out how the contracting would be done – and avoid calling out specific services for contracting, said Stan Marshburn, deputy director of Gregoire’s budget office.
Republicans would prefer lawmakers provide some direction for the contracting, but they said what’s key is that lawmakers force a review of what the government work force does.
“Our interest isn’t per se in specifically getting rid of this entity or that entity,” Baumgartner said. “It’s providing greater value for taxpayers.”