Water Privatization in Bridgeton
By Albert B. Kelly
If there is one thing
that’s true when it comes to government, it’s that “stuff” rolls downhill. Cuts
at the federal level mean cuts at the state level which mean cuts at the
municipal level. For Bridgeton, it means less state aid to our municipality and
that means everything is on the table when it comes to the budget.
Because everything should
be considered, this includes privatization of the City’s water system. We have
the obligation to turn over every rock as we have done through shared service
agreements, perhaps more than any community in South Jersey. Single Stream Recycling
is starting to pay off and looking at privatization of the water system is along
those same lines.
Understand that no
decisions have been made other than to form a study committee to analyze what’s
involved with privatizing our water system; the pros and cons. Such an
undertaking is never a “one-size-fits-all” proposition, so it has to be
examined from a Bridgeton perspective and there are many things to consider.
Our water infrastructure
is an old one with some lines and mains over 100 years old. One aspect to think
about in privatizing the system is the amount of private investment (short and
long term) a company might make in upgrading our infrastructure toward higher
efficiency, lower maintenance, and meeting water quality standards.
Beyond any upgrades to the
system, such privatization might also come with upfront revenues from a company
to the municipality which would certainly ease the budget strain caused by less
aid to Bridgeton. Because national or international companies do this over
multiple jurisdictions, they have a large pool of investment capital to draw
from so for them it’s about economies of scale.
Most believe that the
private sector is generally more efficient that the public sector and I think
that’s generally true. Looked at from this angle, privatizing the system could
solve a number of pressing issues. But there are many other things to consider
as well.
Private companies exist to
make profit, which is why they seek the most efficient cost effective ways to
deliver goods or services. The flip side is that this focus on profit could
come over the needs of our community and its residents, so we want to make sure
that any company has a solid track record in terms of serving communities.
If it’s mostly about the
bottom line, it is fair to ask what privatization means for monthly rates and
how this might impact the many low-moderate income families living from
week-to-week and month-to-month. With a private company, what type of rate
increases would be in play and will such increases be directly pegged to specific
upgrades to our system?
Then there is
accountability; if the service is not what it should be or rate increases
excessive, what type of leverage do we have in responding? In a long term
contract over many years, a private company can’t be accountable to voters in
the way officials are so we’ll need to consider this as well.
We will need to examine whether
the City should pursue a long-term lease/concession-style arrangement with an
upfront payment, or an outright asset sale, meaning a full privatization; both
are models other communities have used.
It is fair to ask about our
existing Water Department employees; are they guaranteed jobs with a private
company and do they maintain benefits. These are all questions that need to be
answered because we’re talking people’s jobs and their lives.
Perhaps a private company
can keep up with evolving water quality standards more efficiently than a
municipality, but things like conservation and environmental responsibility
need to be factored in as well. It is necessary to ask how these considerations
are baked into the cake.
One additional part of our
research will involve speaking with communities around the country that have
privatized their systems to hear about their experiences and how their residents
have fared under a privatization structure. This would also include those
communities that have opted out of privatization contracts as well.
All of these
considerations have to be examined and analyzed and a conclusion reached; which
is why I am assembling a committee that will include elected officials, public
works professionals, the business community, and residents.
This will be a thorough
process and when it is concluded, the results will be shared with the entire community
and together, as a community, we’ll decide what works best for us. Whatever the
outcome, any proposed options or alternatives have to be beneficial from both a
fiscal standpoint and a service standpoint.