Archive for Privatization
AN ACT to protect the fiscal health of North Carolina’s water and sewer systems. [Emphasis mine.]
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 159?181 is amended by adding a new subsection to read as follows:
“(d) The Local Government Commission shall have authority to impound the books and records associated with the water and/or sewer enterprise system of any unit of local government or public authority, assume full control of all its affairs, or take any lesser actions deemed necessary by the Commission when, for three consecutive fiscal years, the audited financial statements of the unit or public authority demonstrate that the unit or public authority meets any one of the following three criteria: (i) the enterprise system experienced negative working capital; (ii) the enterprise system experienced a quick ratio of less than 1.0; or (iii) the unit or public authority experienced a net loss of revenue in the enterprise system using the modified accrual budgetary basis of accounting. Before the Commission assumes full control of an enterprise system as described in this subsection, it must find that the impact of items (i) through (iii) threatens the financial stability of the unit or public authority, and that the unit or public authority has failed to make corrective changes in its operation of the enterprise system after having received notice and warning from the Commission. The notice and warning may occur prior to the expiration of the three?year period. When the Commission takes action under this section, the Commission is vested with the powers of the governing board as the Commission shall deem necessary, which may include all powers of the governing board as to the operation of the enterprise system, including, but not limited to, setting rates, negotiating contracts, collecting payments that are due, suspending service to nonpaying customers, resolving disputes with third parties, and transferring the ownership of the enterprise system. For purposes of this subsection, the term “working capital” means current assets, such as cash, inventory, and accounts receivable, less current liabilities, determined in accordance with generally accepted accounting principles, and the phrase “quick ratio of less than 1.0″ means that the ratio of liquid assets, cash and receivables, to current liabilities is less than 1.0.”
SECTION 2. This act becomes effective July 1, 2013.
So, it’s the No Public Utility Left Behind Act.
If a local system gets into any kind of financial bind, or has a net loss of revenue over three consecutive years, Raleigh’s small-government commandos can just seize control.
Call me cynical, but how much ya wanna bet “transferring the ownership of the enterprise system” is the first choice? As with No Child Left Behind, all the General Assembly has to do is enact separate (apparently unrelated) regulations or strictures that ensure (if drought doesn’t) that local utilities begin having financial trouble with their water/sewer systems and start dropping like flies.
And with each one, somewhere in corporate America a CEO hears ca-ching.
Since I posted this last night, Chuck McGrady and Nathan Ramsey have signed on as co-sponsors to Rep. Moffitt’s Infrastructure bill.
WOW! That was unexpected!
Asheville’s water customers are the ones who stand to get soaked in next year’s water merger legislation, says the News & Record of Greensboro.
… The measure, pushed by Rep. Tim Moffitt, R-Buncombe, and Rep. Chuck McGrady, R-Henderson, was seen as a prelude to a merger. But some critics suspect the ultimate goal is to privatize water services in Asheville. Moffitt and McGrady deny it, but much of this story seems to lie beneath the surface.
Asheville’s objections aren’t unreasonable. Like Greensboro, High Point and most other sizable cities in North Carolina, it has made huge investments in water collection, treatment and delivery. At the very least, its customers and taxpayers deserve fair compensation for what they’ve spent. They are the ones who stand to get a soaking.
Or is that a ducking, Messrs. Moffitt and McGrady?
Is this the same Sen. Kay Hagan who championed another repatriation tax holiday? Hagan is sponsoring a bill to restrict for-profit career schools from using federal student loan dollars to pay for marketing, advertising and recruiting. A 2009 Senate investigation found that 86 percent of revenues received by for-profit schools came from the federal student loan programs. They spent 23 percent on advertising. The Winston-Salem Journal quotes Hagan:
“I’m particularly troubled by the tactics some for-profit colleges have employed in targeting active-duty servicemen and women and their spouses,” Hagan said in a prepared statement. She criticized some for-profit colleges for using “taxpayer dollars to fund aggressive and often misleading recruiting practices.”
Writes Andrew Leonard in Salon, the Hagan bill “would cut for-profit schools off at their knees.” Hagan, a member of the Senate Health, Education and Labor and Pension Committee, cited one such school with 1,700 recruiters and just a single job counselor. Leonard continues,
A little follow-up research reveals that school to be Bridgepoint Inc., a relatively recent, but very fast-growing entry into the for-profit sector. According to HELP committee analysis of data provided by Bridgepoint, as of March 2011, Bridgepoint employed 1,703 recruitment sales staff, and only one job placement counselor. Bridgepoint spends 30 percent of its revenue on marketing and recruitment. (The Chronicle of Higher Education reported in February that Bridgepoint did not contest the numbers in a press release.)
The two-year schools sport an 84 percent
Holy waste, fraud and abuse. Nice going, Senator. FIRE next, please.
Welcome to the United States of Scam-erica. Or Griftopia, as Matt Taibbi calls it in his book on the Wall Street meltdown. “There are really two Americas,” Taibbi writes. For the grifter class, government is “a tool for making money,” while “in everybody-else land, the government is something to be avoided.”
Not anymore. Here is the lesson Americans gleaned from the financial meltdown on and bailout of Wall Street: If the feds won’t prosecute ‘em, join ‘em. Corruption has trickled down.
Now the government haters have their hands out, too. One Georgia Christian school, for example, instructs parents in how to use a state scholarship program to launder their taxable income and turn it into tax-free tuition money. Georgia’s private school scholarship program launched in 2010 diverts about $50 million a year from state school budgets by giving “dollar-for-dollar tax credits” of up to $2,500 a couple for donations to nonprofit scholarship organizations that help needy students access private schools. As the New York Times reports:
That was the idea, at least. But parents meeting at Gwinnett Christian Academy got a completely different story last year … A handout circulated at the meeting instructed families to donate, qualify for a tax credit and then apply for a scholarship for their own children, many of whom were already attending the school.
Rep. Tim Moffitt, R-Buncombe, has been a busy fellow. A privatization study committee he is on has strayed from studying into legislating. WRAL reports:
The Republican-led House Select Committee on State-Owned Assets was supposed to consider the sale of some of the state’s more than 11,000 assets. Instead, the panel narrowly approved the nine-page draft bill that would radically alter the operations of the Chapel Hill-based hospital system [UNC Health Care].
But members of the committee were not given a chance to read the bill before the meeting, said Rep. Becky Carney, D-Mecklenburg, who voted against the proposal.
Thanks again to the League of Women Voters for hosting this forum and for providing this record of the meeting. There’s going to be a day-long public meeting of the “Study Committee” on February 23rd you can attend. Mtn. Voices Alliance is hosting a panel on the matter at Jubilee on Monday, Feb. 20th.
I believe the entire “Study Committee” exercise unnecessarily tears open an old wound. Buncombe County and Asheville City governments are cooperating better than ever, and we can all agree that the current management of the water system is excellent. Here’s hoping the whole matter can be settled without any further damage, and our representation can get to creating jobs, improving education, and listening to the people they represent.
Re: 50-50. So I was joking the other day that some people in this country would sell you the air you breathe if they could control how it gets to your nose. For now, they’ll settle for controlling how you get water to drink — anything to turn public assets into private profits.
“The thing that would be most beneficial economically to this country? Privatize the private sector … Because the private sector is living off public money to an extent that you would be shocked by if it was really pointed out to you.” — Vanity Fair writer, Fran Lebowitz [timestamp 22:45]
Privatizing infrastructure, government and the private sector
Penn State law professor Ellen Dannin, an expert on infrastructure privatization contracts where (as I’ve been saying about privatizing public schools) profits are guaranteed:
“There is serious misalignment. There is a serious imbalance of power … Tell me where the competition is where you have the Indiana Toll Road. What’s the competition? The reality is, not only is there no competition in general for that kind of infrastructure, but they actually have provisions in the contracts that say you can’t have competition.” [timestamp 6:27]
“What’s supposed to make a private entity do a better job is the possibility that they could fail. That is what is supposed to push them to provide better service, better products. Here, they can’t fail.” [timestamp 9:45]
“Ultimately what we run the risk of losing is democratic control over democratic institutions, over infrastructure that we and our tax dollars have bought and paid for.” [timestamp 10:55]