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COLUMN RIGHT : Would the City Rather Cut or Privatize? : L.A. has alternatives to freezing police hiring.

<i> Kevin D. Teasley is public affairs director of the Santa Monica-based Reason Foundation</i>

Mayor Tom Bradley has again demonstrated his ability to make tough decisions--even politically risky ones. His announcement to extend a city hiring freeze to the police force, in the face of more than 800 homicides in Los Angeles already this year, represents a very tough choice.

Unfortunately, it may not have been the right choice. Bradley could learn from the example of New York Mayor David N. Dinkins and Virginia Gov. L. Douglas Wilder. Both have policies that ensure that vital services, such as protecting the people, are funded before providing other services. Had Bradley done this, he might have avoided a police hiring freeze.

To ask what items could be cut from the city’s budget, though, may not be the appropriate question. In a report published in late 1988, the Reason Foundation showed how Bradley could avoid tax increases, service cuts and hiring freezes.

The report showed that the city could save $69 million in 1988 dollars--the equivalent of $80 million in 1991. These savings could be realized by using alternative service delivery contracts in just four areas: residential garbage collection ($49 million), street resurfacing ($24 million), street sweeping ($6 million) and building security ($1 million). Altogether, saving $80 million per year would wipe out the city’s projected budget deficit of $120 million over the next 18 months.

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Alternative service delivery, a form of privatization in which services are contracted out through competitive bidding, is catching on across the country. Convention centers, garbage-collection services, golf courses, zoos, data processing and many other functions are being contracted out--not eliminated--to the private sector at a net savings to the taxpayer.

Dallas has contracted out street resurfacing. Houston, San Francisco and Phoenix have contracted out garbage collection and San Jose street sweeping.

In addition, Bradley should look at Los Angeles County’s program. Garbage collection, which is contracted out, costs $64.3 per household (in 1988 dollars) compared with the city’s $158.6 per household. The county’s contracted-out street resurfacing costs $98.5 per mile compared with the city’s service at $203.2 per mile.

Bradley can deter opposition to contracting-out by following the example of the county, which has a no-layoff policy in programs that are contracted out and requires companies to offer jobs to affected county employees. In Phoenix, city employees can bid against private firms.

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According to a 1989 American City and County survey of 1,000 local officials, 22.7% turned to privatization in the face of fiscal pressures. A recent Touche Ross (now Deloitte-Touche) survey said that state and local government officials see privatization alternatives as playing a major role in the 1990s. In addition, officials gave very favorable quality ratings to service already privatized.

So Bradley is not alone in his fiscal crisis, nor is he without alternatives.

Bradley may be forced to consider these options. A recession is a real threat to the city’s budget. Already numerous companies are laying off employees--decreasing overall consumer buying power and increasing demands on existing public services while decreasing the tax base of the city. Some companies are leaving the area, taking with them millions in tax dollars.

The state and federal governments are in no position to offer any assistance, either. The recent budget deal in Washington decreased revenue outlays to cities and states. And Gov. George Deukmejian has called the Legislature back into session to deal with the state’s own fiscal crisis.

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There is a bit of encouraging news from Washington. Richard Darman, director of the Office of Management and Budget, supports experimentation in public policy at the state and local level. He recently promoted the use of states as “laboratories.” Calling it “one of the undeveloped virtues of federalism,” Darman said that “the federal government should do more to encourage statewide trials of interesting ideas, and to learn from the natural variation among the states.”

Bradley has already demonstrated that he is willing to consider alternatives to city-provided services. The mayor recently announced that he is seeking proposals from companies interested in providing transportation infrastructure to the city--a program inspired by the California Department of Transportation’s approval of four private toll-road projects. If Bradley is successful, the city will receive improved transportation means without raising taxes or cutting other services.

The mayor is brave to consider a police hiring freeze. But he should not hold the city hostage when he has not fully considered other viable options.


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