When It Comes to Services, Taxpayers Are Shopping Blind
The consumer movement has fostered a marked improvement in contemporary American life. Better products, lower prices and greater selection are the results of the competitive market pressures that consumerism has unleashed.
The bounty of consumerism would not have flourished so quickly nor have been so broadly distributed without the benefit of accurate pricing information. Look in any newspaper at automobile dealer and department store advertisements that boldly proclaim lower prices. Walk down any supermarket aisle and see the prices of literally thousands of items clearly and plainly marked. It is even possible to compare unit prices for each sheet of paper towels and each ounce of cereal. No doubt about it: Clear, accurate pricing information is the cornerstone of consumerism.
Yet in one huge sector of the American economy, pricing information is very difficult to obtain: government. Getting even basic pricing information for government services is, at best, a tedious and time-consuming process. The unfortunate result is that the consumers of government services, taxpaying citizens, are largely prevented from applying pressure on governments to do what private sector business must constantly do to survive--provide better services at lower prices.
This sad reality was in evidence once again in Orange County when it was “revealed” that some cities were paying much more than neighboring cities to the Orange County Fire Authority for fire protection services. The magnitude of the differences is sobering. According to one recent study, commissioned by the fire authority board, Irvine pays over $5 million more for fire protection services than its “fair share” for these services, while neighboring Tustin pays about $1.3 million less than its “fair share.”
One may argue about what constitutes a particular city’s “fair share.” But what cannot be argued is that the citizens of some Orange County cities are paying substantially more for fire protection than taxpayers in neighboring cities. Indeed, on a per capita basis the differences are even more striking. As recently as 1995, citizens of Laguna Hills were paying about three times as much ($145 per person per year) for fire protection than were citizens of Cypress ($48). Yet both cities were purchasing the service from the same vendor, the Orange County Fire Authority.
Substantial differences also existed between Orange County cities that operate their own fire departments or contract with adjacent cities for fire protection services. The annual cost for fire protection services in Garden Grove was about $56 per capita, while in nearby Santa Ana it was more than $85, a large difference by any measure.
Such huge differences in cost are not limited to fire protection. Per capita costs for everything from police protection to libraries to city planning vary by orders of magnitude throughout the county. Nor are such differences exclusive to cities in Orange County. Recent studies we have conducted at the Rose Institute have uncovered stunning differences in the amount of money that school districts spend on educating children; the amount different counties spend on welfare; and the amount special districts around the state charge for water and sewerage service. The phenomenon is pervasive throughout California and exists for every category of local and regional government service.
American consumers demand and receive accurate pricing information for almost all other types of products and services; why not for government? Can you imagine two neighbors chatting about their recent car purchases and one saying to the other, “Oh, it’s OK, George, I don’t mind paying twice as much for my Taurus as you paid for yours. After all, they are both equipped about the same; we just bought ‘em from different dealers.”
Of course, some government officials are going to argue that such price-related comparisons are unfair because the reasons for the cost differences are “complex.” Indeed. Another healthy aspect of consumerism is vigorous competition to produce superior products. Private sector companies and service providers go to great lengths to detail the precise attributes of their products in terms of value. Getting such information about the services provided by government agencies is all but impossible for the average citizen.