Feds Hamper Local Privatizations
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Local governments have been transferring appropriate functions to private
firms to achieve higher quality and lower prices compared to public entities,
but reformers say federal rules are getting in the way of doing more.
- Congress' Joint Economic Committee has identified $227 billion in state
and local properties that could be sold to individuals.
- The properties include highways and bridges, waste-water plants, commercial
airports, water systems, electric utilities, parks, parking structures,
waste-to-energy plants and gas utilities.
- The roadblocks include federal grant limitations, labor provisions
and environmental laws.
If an asset financed with a federal grant is sold, the feds want their
money back even if the undepreciated grant exceeds the value of the asset
-- leaving localities little incentive to sell.
- Federal rules say that in the sale of airports, localities must plow
all remaining proceeds from such sales back into the airports.
- Companies are discouraged from buying cities' mass transit systems
because federal labor laws require that dismissed workers get up to six
years' severance pay.
- Since private waste-water treatment plants must -- under environmental
rules -- meet tougher standards than government ones, private firms are
discouraged from buying them.
Privatization advocates say Congress should remove these barriers.
Source: Charles Oliver, "When the Government Gets in the Way,"
Investor's Business Daily, February 27, 1997.
For more on Privatization go to http://www.ncpa.org/pd/pdmonth.html
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