State, counties to act cautiously, lawmakers say

By Kevin Dayton and Dan Nakaso
Advertiser Staff Writers

At least one union is warning of "massive" public worker layoffs as government contracts out public services, but political leaders at the Capitol predict privatization won't be used to clobber public employees.

United Public Workers state director Gary Rodrigues said the blue-collar workers in his union will be targeted because many private companies handle the kinds of groundskeeping, janitorial and other work that UPW members do.

Lawmakers on Tuesday approved a bill to allow virtually unlimited privatization, and Gov. Ben Cayetano signed the measure today.

Rodrigues predicted Honolulu Mayor Jeremy Harris will embrace privatization and said Cayetano might as well.

But other observers predicted the state and counties will proceed cautiously.

Public officials aren't eager for large numbers of workers to lose their jobs.

Also, lawmakers pointed out that the public worker unions will still be able to use political pressure to influence what services are privatized.

"I don't think that the unions really are that concerned about it because they feel that they probably can negotiate with the chief executive, whoever it is on either side, because they know it's an election year next year," said Sen. Colleen Hanabusa, D-21st (Kalaeloa-Makaha). "It's almost like a big hammer that (the governor and mayors) have, but I'm not sure they're gonna use it, especially not in an election year."

Harris could not be reached for comment yesterday, but Cayetano has said the state will proceed carefully.

"You don't privatize simply for the sake of privatizing," Cayetano said. "I don't think it's right, for example, that we privatize and hire companies which pay people minimum wage and (offer) the bare necessities in terms of benefits, and get rid of good state jobs that way."

"So, we're going to to look at ways to require the people who do business with the state to make sure that they pay their workers a fair wage and provide some benefits."

Cayetano noted the state already contracts with nonprofit organizations that provide social services as well as professionals such as architects and engineers for as much as $400 million a year in services in programs.

On Maui, Democratic Mayor James Apana said he is still studying the privatization measure but does not foresee layoffs in connection with privatization.

The move to privatize traditional city, county and state services has had mixed results on the Mainland and some companies have ended up in bankruptcy, said Edward Lawler, a distinguished professor of business at the University of Southern California.

Cities have saved money by turning over parking enforcement and ticket collection to private companies and by giving up data management and information systems, Lawler said. But other areas, such as private prisons and school systems, are inconclusive.

"Often the gains are more in the imaginations of the people who push for privatization than the reality of what you'll get," Lawler said.

Thomas Gale Moore, a senior fellow at the Hoover Institution at Stanford University, sees more positive things coming out of privatizing public services.

"Almost inevitably, privatization has reduced costs with no loss of services," Moore said. "Some places, it's reduced costs quite a bit and other places more modestly.

"In general, the taxpayers and the consumers benefit."