S.C. Statehouse Report
Aug. 1, 2004
VIEW: http://www.statehousereport.com/columns/04.0725.election.htm

Privatization not always a good solution
By Andy Brack
SC Statehouse Report

AUG. 1, 2004 - - Privatization - - the practice of paying big business to handle services traditionally provided by government - - may start to rear its ugly head more in South Carolina.

Gov. Mark Sanford "has never stated publicly" that he believes big quasi-governmental agencies like electricity-generator Santee Cooper or the S.C. Ports Authority should be privatized, according to spokesman Will Folks.

But in a recent story in The Augusta Chronicle, Folks admitted the governor's office was "willing to entertain the idea" to privatize Santee Cooper: "Any discussion that's focused on maximizing value and efficiency to the taxpayer is a good discussion."

Not necessarily.

Privatization of some government services, such as garbage collection or running school buses, are successful because the scale isn't overwhelming. Sometimes it makes sense to enter public-private partnerships to run toll roads or build specific projects.

But privatizing massive agencies that provide huge public benefits would have a detrimental impact on the state.

Sure, selling off agencies like Santee Cooper or the Ports Authority would generate a lot of cash. But that shouldn't be the only factor to be considered when looking at privatization.

In these two cases, privatization is wrong because it would take control of significant economic functions of the state and tie them to decisions made by people outside of South Carolina.

"Government is a democracy," points out state Sen. Tom Moore, D-Clearwater. "Business isn't."


McLEMORE'S WORLD: Another kind of convention



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In other words, agencies like Santee Cooper and the Ports Authority ultimately now answer to state lawmakers and the people Because of the very structure of the agencies, both of which are generally considered self-sufficient, they have to perform in the best interests of the state of South Carolina. If, however, they become answerable to a board of directors and shareholders, decisions likely would be made that may not in South Carolina's interests.

The consequences could be disastrous. For example, the Ports Authority's annual operations are responsible for an estimated 281,660 jobs in the state. Water-borne commerce that flows through the Ports Authority equals $23 billion annually, or almost 17 percent of the state's total.

Currently, the Port, considered a model by many for its flexibility and the professional service it offers, is a public resource charged with maximizing benefits for South Carolina and its businesses. But if a private company is put in charge, it may decide to send ships to other ports that it runs instead of sending business through South Carolina.

In other words, the Ports Authority currently steers jobs to the state. A private entity might find business reasons to steer them away, which is not in the state's best interest.

Another consequence: higher rates. If Santee Cooper, which generates $1.1 billion in revenues and $69 million in annual profits, were to be sold to the highest bidder, electricity rates likely would go up.

The 765,000 people and business in the state who get their electric power through Santee Cooper know it is relatively inexpensive, stable and reliable. As one observer put it, Santee Cooper's power is the one of the best deals citizens get in South Carolina.

But if a private company took over the state's power business, higher rates would result because the company would have to service the big debt it took on to buy the company.

There's another reason the state shouldn't lose control of this valuable asset: the Enrons of the world. Remember the big scandal a few years ago when California couldn't provide enough summer power to residents? Its power had been privatized by a company that made some bad decisions.

Another way to look at the whole privatization debate is to think about how you feel when you phone technical support for help with computer problems. When the person on the other end of the line is in India, it rankles. You immediately know the computer company outsourced the job because it was more interested in the bottom line than the customer.

Outsourcing services provided by Santee Cooper or the State Ports Authority are bad ideas that need to be shelved.

Remember the old maxim, "If it ain't broke, don't fix it?" These two agencies have challenges ahead, but letting outsiders direct their economic clout shouldn't be one of them. Fortunately, most lawmakers probably agree.


81/: Another kind of convention

This week's cartoon by our Bill McLemore:


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