Magazine article USA TODAY

Making Government Cheaper and Better

Magazine article USA TODAY

Making Government Cheaper and Better

Article excerpt

"... The opportunities for improving service through [private-sector] competition are as vast as the free market itself."

EVERY DAY, the private sector introduces new products, improves old ones, expands services, and, in general, reduces costs. The desktop computer on which this article was written, for example, was nonexistent 25 years ago and essentially unaffordable until recently.

Government, on the other hand, becomes less responsive and more expensive over time. Spending by the Federal government has exploded over the past four decades, yet almost no one would argue that government services are better today than they were 40 years ago. To most government managers, the private-sector practice of cutting budgets while increasing services seems a bizarre and paradoxical dream.

The notion that, by definition, more spending improves services is the single most destructive idea that hampers government policy today. It explains why so many attempts to get Federal, state, and local budgets under control start in deceit and end in gridlock. We all agree the budget must be cut, but the underlying assumption is that services must therefore be reduced, which means the debate boils down to an argument over whose ox gets gored.

Not surprisingly, many elected leaders now talk about "running government like a business," looking to the private sector for a way out of the spiral of higher taxes and declining services. Indianapolis has been a part of this trend toward efficiency in government. Some might even suggest that it has been at the forefront. Since 1992, my administration has allowed private companies to compete for contracts to provide more than 75 city services. In the process, we have reduced our operating budget, lowered taxes three times, and cut our non-public-safety workforce by nearly 50%. Even as we have decreased the total budget, we have raised the public-safety budget by almost 30%; put 100 more police officers on the street; invested over $1,000,000,000 to rebuild roads, sewers, and other parts of the city's infrastructure; and increased our budget reserves by more than 400%.

Equally important, competition has dramatically improved the quality of city services, increasing productivity and boosting customer satisfaction. Rather than lowering service quality or slashing wages, our private partners have produced savings through innovation and a strong focus on customer service.

Looking beyond arbitrary public/private distinctions has enabled us to tap the skill and creativity that are at the heart of every successful business. The following examples explore just a few of the ways that private companies have produced public services that are not just cheaper, but better.

When I took office in 1992, the local Chamber of Commerce presented me a report indicating the city needed more than $1,000,000,000 in infrastructure improvements. Sewer rates had not been raised since 1985 and, by some estimates, a 37% increase was needed to fund long-overdue repair work.

Our wastewater treatment facilities seemed an unlikely place to look for savings. The plants had won numerous awards for efficiency and environmental quality, and were generally considered among the best government-run facilities of their kind. When we hired a Big Six accounting firm to assess the potential savings private management might produce, the report concluded that we could expect to reduce operating costs by a mere five percent.

Yet, we were convinced that competition could improve even the best government operation. We decided to test the marketplace, asking the best wastewater treatment firms in the world if they could improve operation of the plants while saving taxpayers money. The winning proposal came from a company called the White River Environmental Partnership (WREP)--a consortium of the privately owned Indianapolis Water Company, French-owned Suez Lyonnaise des Eaux, and Denver-based JMM Operational Services, Inc. …

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