(Cross-posted from The COFAR Blogsite)
Although we are an advocacy organization that focuses on human services, we have at times waded into the ongoing controversy over the operation of the MBTA in Boston.
The reason for that has to do with a now decades-long debate over privatization of public services and the implications of the Pacheco Law in that regard.
On Sunday, The Boston Globe reiterated its support for the privatization of T functions with an editorial that defended the current contracted operation of the T’s problem-plagued commuter rail system.
As a supporter of privatization, the Globe has, in recent years, been at the forefront of the long-running criticism in political and journalistic arenas of the Pacheco Law. But in calling on Sunday for a cost-benefit analysis prior to any proposed move to bring the T’s commuter-rail system in house, it seems to us that the Globe is also endorsing, if inadvertently, the principles and intent of the law.
The Pacheco Law requires state agencies seeking to privatize existing operations to do a cost-benefit analysis that demonstrates that the cost of privatizing the service would be lower than continuing to do the service in-house, and that the quality of service would be equal or better if it were privatized.
The Pacheco Law, which was enacted in 1993, has been a lightning rod for political criticism and controversy over the years. Much of the state’s political establishment and prominent journalistic institutions have been harshly critical of it.
We have supported the law because we see it as providing a potentially important layer of oversight and analysis in the ongoing privatization of services for the developmentally disabled in Massachusetts.
In a 2011 editorial, the Globe called the Pacheco Law “an affront to common sense,” and charged that it was allowing public employee unions to place their “demands” above “the obligation to run government efficiently.”
But in its editorial on Sunday, the Globe actually put forth an argument that appears, without directly admitting to it, to endorse the precepts of the Pacheco Law. In criticizing calls by Democratic candidates for governor for in-house operation of commuter rail when the current contract with Keolis expires in 2022, the editorial states:
Whoever is in charge in 2022, though, here’s a suggestion: Since in-house management is an idea that refuses to die, [and I would add, so is privatization, for that matter!] the state should ask the T to submit a plan showing what it would entail. If nothing else, that would clarify for the public the costs and benefits, and bring some specifics to what is now little more than a vague applause line for Democrats. (my emphasis and insertion in brackets)
That is exactly what the Pacheco Law calls for when state agencies seek to privatize services. What the Globe is calling for is the same type of cost-benefit analysis, only in reverse — from privatized services to in-house. To me, it actually sounds like a good idea.
The Sunday editorial further states that while the state “can definitely do a better job with commuter rail after its current contract with Keolis expires in 2022…the goal of better service, not adherence to ideological precepts, should guide the next governor.” (my emphasis)
Agreed, and that is also the goal of the Pacheco Law, which is to ensure better service and lower cost rather than privatizing based on ideological precepts.
The editorial contends that:
…the T doesn’t have — and never has had — the in-house ability to operate the commuter lines itself, and dumping the commuter rail system directly into an already overburdened agency risks disruption. It could also raise thorny union issues, probably raising labor costs. And there’s no reason to expect running the commuter rail in-house would result in better service. (my emphasis)
Maybe not, but in-house operation of commuter rail might actually result in cost savings.
We reported in 2015 that the annual cost to the MBTA of contracting for commuter rail services had risen by 99.4 percent since 2000, compared with a 74.9 percent increase in the annual cost of the agency’s in-house bus operations, according to cost information we compiled from public online sources.
Finally, the Globe editorial suggests that rather than bringing management of commuter rail in house, the T should consider offering the next contractor “a longer-term deal, to better align the incentives of the contractor and the state and potentially bring in private-sector money for capital investments.”
I would note here that long-term contracts are not necessarily better deals for the state or consumers. It is difficult if not impossible to project financial risks over long periods of time. As a result, long-term contracts tend to have provisions that protect private contractors from those risks while transferring the risks to the public.
Also, private investments for capital improvements must be repaid by taxpayers and riders, and those deals can be very expensive to the public. Often there is little transparency in the terms and provisions of private investment arrangements in public infrastructure.
All of these are reasons why the Pacheco Law is necessary and important to the continued efficient and effective operation of government. The law provides for an open and detailed analysis and discussion of costs and benefits when public and private services and functions come together.