Wilson Plans to Privatize 2 Warehouses

Gov. Pete Wilson will announce today that he plans to close the state’s warehouse operation for office supplies and turn it over to a private company, taking a first step toward a new and controversial effort to privatize state government, sources said.

Wilson’s scheduled announcement at a meeting of department heads represents a surgical but symbolic attempt to illustrate the changes that he hopes will result from an internal review that he ordered last fall involving every state office and function.

The change at the two warehouses--one in Fullerton and one in Sacramento--would eliminate 47 government jobs and relocate the state’s average $4-million inventory of office supplies to a private vendor selected through bidding.

Wilson officials have declined to talk about the ultimate scope of their privatization plans until the review is completed in April. But they have indicated ambitious expectations affecting millions of dollars and hundreds of jobs.

“The new responsibilities being shifted to Sacramento from Washington and the ever-increasing competition of a shrinking global economy demand that we not only work to improve the efficiency of existing tasks, but fundamentally rethink the structure and performance of state government from the bottom up,” Wilson wrote in a report to be issued to department heads today, a copy of which was obtained by The Times.

Wilson’s limited public discussion about privatization has already triggered a strong protest from state employee unions, many of which sent members to an informational picket line at state offices throughout California last week. Several groups also have joined a major publicity campaign to challenge the governor’s contention that privatization can be more cost-effective and consumer-friendly.

“It’s bad policy,” Perry Kenny, a director at the California State Employee Assn., said recently. “It encourages cronyism and corruption. It threatens the security of state workers and the highly skilled work force currently employed by the state.”

Union officials and Democratic leaders said they were unaware of the governor’s plan for the warehouses and could not comment. One union representative said employees at the Fullerton warehouse were told Thursday to expect “cutbacks, closure and consolidation.”

Previously, state Senate Democratic Leader Bill Lockyer has promised to give fair consideration to Wilson’s plan even though he has concerns about its cost-saving claims. Last year, Senate Democrats quickly rejected legislation sponsored by the governor to roll back Civil Service laws that prohibit some of Wilson’s reforms.

Wilson officials said the bill, which would order a ballot measure asking voters to approve the Civil Service changes, will be resubmitted this year in the Assembly, where Republicans won majority control last month.

Even without new legislation, Wilson officials believe that they can make significant changes to state government. Sources said the governor does not believe that legislation is needed to implement his order involving the two warehouses.

Officials said the 47 employees affected--at least 12 have already been transferred to other state offices--will receive Civil Service and union protections that will rank them as top candidates for other state openings or, in some cases, provide a return to previous state jobs. They said others will receive retraining or job search assistance.

It was uncertain whether any would be dismissed from state employment.

Wilson’s proposed change to the warehouse operations would significantly alter the way state departments receive office supplies--everything from pens and pencils to paper and calendars. The state Department of General Services purchases the equipment for its warehouses and then sells it to other state departments.

Under Wilson’s plan, the state would contract with a major supplier of office equipment and allow state agencies to make purchases directly from the vendor through a catalog made specially for California government needs and prices. To keep the vendor competitive, the plan would also allow agencies to purchase their equipment elsewhere if they found a better or cheaper product.

Wilson officials said a recent study estimated that the change would save the state $20 million a year, mainly by ending its role in warehouse and distribution jobs. They hope to have the change completed within a year.

Officials said the change has been made possible by recent business trends that have produced large office supply companies that did not exist when the warehouses were opened in the 1950s.

In addition to office supplies, the two warehouses also store food for the state’s hospitals and prisons. Officials said it was unclear whether the governor’s plan would allow the state to sell or close the warehouses, which are about 100,000 square feet each.

In a workbook to be distributed to department heads today, the governor asked that all state functions be placed into one of four categories: “retain, improve, outsource or transfer.”

The booklet listed state finances, public safety and restricted data as functions that should be retained as state operations. It also said parks and roads would remain a state function, but it suggested that private vendors could operate some of those services, as has been done recently with a highway in Orange County.

The report said some operations should be improved through streamlining and others would be better served by transfers or consolidations with new departments. Finally, it calls for “outsourcing,” the government’s term for functions that should be transferred to private companies for cheaper and more effective service.