(Creative Commons)

What would happen if private companies were able to provide driver’s licenses, do janitorial work for the State Capitol, collect business fines, and even police the highways?

This is the question California political analysts are raising in response to a request from five Republican state senators to Gov. Jerry Brown that he auction off government services to private companies. 

The five Republican senators in talks with the governor, (Tom Berryhill, Sam Blakeslee, Anthony Cannella, Bill Emmerson and Tom Harman) also known as the GOP 5, wrote in a letter to Brown their proposal for government reform. The spokeswomen for the senators did not immediately respond on Thursday to requests for comment on this story.

In their open letter to Brown, the group said their goal would be to "maintain the existing collective bargaining process, but modify the civil service statutes to eliminate the monopoly whereby the state’s work must be performed solely by government employees and allow local and small businesses to compete to provide services. Competition would increase the quality of services while creating billions of dollars of savings. Promotions, layoffs and raises should be based on performance.” 

In simpler terms, the state allows private companies to bid to take over government services. The lowest bidder wins, whether that be the private companies or the original public employees. This allows the government to lower their budget, and proponents say, more responsive workers. The threat of competition forces the government programs to work harder to keep their jobs and beat out the private companies.

“Competition can produce better service at lower cost," said John J. Pitney, Jr., a poltical science professor at Claremont McKenna College. "When public organizations have to vie with private ones, they can become more efficient and effective."

Outsourcing has been attempted in various other cities across the country and around the world, but with varying degrees of success.

Indianapolis implemented this system in the 1990s and found it greatly increased productivity and lowered the budget. The city was able to cut many supervisors, which lowered wage costs and helped make their divisions run more smoothly. Further cost cuts eventually afforded bonuses to emplloyees. (For a detailed analysis, see here). In the analysis, former Indianapolis mayor Stephen Goldsmith noted that private bidders, “have technologies we don’t have, research we don’t have, scale we don’t have. It’s not that our employees are bad, but our technology and research and scale are limited.”

 Other cities around Los Angeles County have also privatized work, such as Maywood, a city of 40,000. According to the Wall Street Journal, last year, the city laid off their entire staff and contracted with outsiders to perform all city tasks.  Maywood disbanded the police force and handed public safety tasks over to the Los Angeles County Sheriff. 

Though this has worked in smaller cities throughout the country, the question is still how would it fare in the country's largest state and one with an unemployment rate of over 12 percent?

“California is in a very vulnerable state right now,” CSU Long Beach political science professor Ed Kaskla said. “The government is taking advantage of a crisis to bring in even more chances for some to benefit at cost to the many.”  

The assumption of the program is that private companies provide cheaper and more efficient services, “but if you replace them (union employees) with people making less wages, this will have effects on the entire economy that may not be to the benefit of the economy as a whole.  That is, people who earn less also--by definition--will have less to spend, so that does not help California’s economy at all. The economy still needs more consumption and this would work against that need,” Kaskla said.

Other downsides must be kept in mind as well.

“Such a system is hard to build and operate, requiring careful monitoring. If public officials are not sincerely committed to making it work, then it won't,” Pitney explained. 

Analysts also fear what could happen to labor unions if this were to occur.  If the government were to outsource these jobs, state union members would be out of work.  The state's powerful unions--from prison guards to engineers--would be quick to fight this decision, as they have done in other cities. That's also why Brown has not hastily voiced his support for the GOP 5's proposal.

Only time will tell if this proposal is implemented into the California government, as the state waits for the budget to be finalized.  It may be beneficial, or, as Kaskla said,  “It will make a bad situation worse, perhaps a lot worse. This is not something to be happy about.”

Reach reporter Charlotte Spangler here.

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